While making payment to individuals and institutions, it is necessary to deduct TDS on it. Examples of this are the salary received from the company by the employees and the interest received on FD from the bank. In case of salary, employers are required to deduct TDS. It is deducted as per the tax slab of the employee.
It is necessary for individual tax payers to inform the Income Tax Department about their income. You are also paying tax on various types of income you receive. Actually, while making payment to individuals and institutions, it is necessary to deduct TDS on it. Examples of this are the salary received by the company from the employees and the interest you receive on FD from the bank. In case of salary, employers are required to deduct TDS. It is deducted according to the tax slab of the employee. Fixed rate of TDS is applicable on other types of income except salary. It is important to keep in mind that in some cases TDS is applicable only when the amount of income exceeds a limit.
When is TDS applicable?
If the interest received on fixed deposits in the bank crosses Rs 40,000 in a financial year, then TDS is applicable on it. In case of senior citizens, this limit is Rs 50,000. In case of corporate bonds, TDS is applicable on interest of Rs 5000 or more. Many times TDS is deducted even on income which does not exceed the limit. In such a case, taxpayers can use Form 15G or 15H to correct this mistake.
What is the difference between Form 15G and Form 15H?
The purposes of Form 15G and Form 15H are the same. But, there is a difference in the way they are implemented. This difference is based on the age of the taxpayers. If the taxpayer is below 60 years of age and has no taxable income then he has to use Form 15G. Form 15H is for senior citizens. If the income of a senior citizen is not taxable then he can use Form 15H. Neeraj Aggarwal, partner, Nangia Anderson India, says it is important to keep in mind that Form 15G and Form 15H are only for residents. Non-residents cannot use them.
When can Form 15 be used?
Form 15G and Form 15H are self-declaration forms. It is used in case of unnecessary TDS deduction. Many times banks or other institutions deduct TDS on interest despite the taxable income being low. In the old regime of income tax, if the annual income of a person is Rs 2.5 lakh then it does not come under the purview of tax. If the age of the taxpayer is more than 60 years and less than 80 years then this limit is Rs 3 lakh. For people above 80 years of age, this limit is 80 years.
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