Investing in a fixed deposit can prove to be a wise investment as it provides risk-free and high returns. However, the interest that you earn through FDs is taxable. Your lender deducts TDS (Tax from the Source) and provides the balance interest amount to you. TDS is calculated to be 10% of the interest earnings.
Banks deduct TDS only if the interest earned by an individual exceeds Rs. 50,000 for senior citizens and Rs. 40,000 for regular citizens. This provides relief to people who are not earning a huge interest amount from their FDs.
However, if you are an investor with an annual income less than Rs. 2,50,000, you do not have to pay TDS on FD interest even if the interest earnings exceed the limit of Rs. 40,000 (for regular citizens) and Rs. 50,000 (for senior citizens). To avail this TDS exemption, you need to submit Form 15G or Form 15H. Let’s see who is eligible for filing these forms and how it needs to be done.
Who is eligible for submitting Form 15G and Form 15H?
Though Form 15G and Form 15H can be used to get a tax rebate, not everyone is eligible for it. Companies and firms cannot avail of the tax rebate by submitting 15G and 15H forms. Now, we will see who can submit form 15G and 15H:
- Form 15G – This form is meant exclusively the individuals who have an age below 60. Therefore, an individual who is non-senior and is not eligible to pay any taxes as per the Income Tax Act can fill this form. Members of HUF (Hindu Undivided Families) and trusts can also avail the tax benefit by filling out this form.
- Form 15H – If your income is not taxable as per the Income Tax Act and if you are above 60 years old then you can fill Form 15H to avail TDS exemption. Therefore, this form is the same as Form 15G except for the fact that it can be used only by senior citizens.
How to fill 15G and 15H forms?
Form 15G and 15H are easily available on the official website of the Income Tax Department of India. These forms have two sections viz. Part A and Part B. Part A will comprise of all your personal information, and Part B will comprise of your tax details and liabilities. Fill the form that is applicable for you and submit it to the nearest branch of your bank or finance company.
Alternatively, you can visit the online portals of the bank and confirm your eligibility to submit Form 15G and 15H. After that, you can fill and submit the form online.
To prevent the TDS deduction, you need to submit the form at the start of the financial year. If you fail to do so, you can also claim the TDS refund by mentioning that in your ITR (Income Tax Returns) form.
How to earn high returns while saving taxes?
You cannot build a sizeable corpus for your future just by saving taxes. For that, you will also have to get high returns. Company FDs provide high-interest rates and therefore, you can use them to build a huge corpus. Bajaj Finance FD is offering interest rates up to 8.35% for non-seniors and 8.70% for seniors.
You can invest in multiple fixed deposits in such a way that their maturity dates do not clash. For example, you can leave some gaps in the maturity dates of your FDs in such a way that the interest that you will be earning through them do not fall in the same year.
Bajaj Finance provides an online FD calculator on its website, which allows you to predict your returns accurately. Moreover, it also provides a multi-deposit facility that allows you to lock-in different amounts for different tenors with a single investment. By using the multi-deposit facility and FD calculator, you can decide the tenor and investment amount in such a way that you won’t be liable to pay TDS afterward.
Bajaj Finance FDs have been accredited for their safety and stability by reputed credit rating organizations like ICRA and CRISIL. Moreover, its deposit book has crossed Rs. 16,000 crores and with over 2, 50,000 customers, it is certainly gained the trust of investors across all age groups. Also, it provides a 0.10% additional interest rate on FD renewal. You can also use the cumulative FD option to reinvest the principal amount along with interest and build a sizeable corpus.