Bank RDs - Can you avoid TDS?

 If you are not liable to pay tax because your total income is below the basic exemption limit, you can avoid TDS by submitting a declaration to the bank. Those who do not fall under the tax bracket and are below the age of 60 can submit Form 15G to the bank to claim TDS exemption. Those not under the tax bracket and above the age of 60 can submit Form 15H. The Forms 15G and 15H have to be submitted at every branch of the bank where you have a deposit.

 

Before you rush to submit the Form 15G or 15H, make sure you are eligible. An individual must satisfy two conditions to avoid the TDS. First, the estimated taxable income for the financial year should be less than the basic exemption limit. This is `2.5 lakh for individuals below 60 years, `3 lakh for senior citizens, and `5 lakh for very senior citizens-above 80 years.

The second condition, which is applicable only to Form 15G, is that the total interest income from all sources should not exceed the basic exemption limit. Senior citizens have been exempted from this condition because most retirees get the biggest chunk of their income from interest.

These forms also require the individual to mention details of other incomes, including dividends from shares and mutual funds. Dividend income is tax-free but the Income Tax Department still wants to know how much you earned from them.

You must carefully assess your income before submitting Form 15G to escape TDS. If you are not eligible to receive the exemption, but you submit the form, it can have serious repercussions. Giving incorrect information to avoid TDS amounts to tax evasion. A penalty of up to `1 lakh can be slapped in such cases

 

 

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