How Senior Citizens Can Avoid TDS on Fixed Deposit Interest Under the New Tax Regime
How Senior Citizens Can Avoid TDS on Fixed Deposit Interest Under the New Tax Regime
Before submitting Form 15H, it’s crucial for senior citizens to accurately estimate their total income from all sources, including pensions, rents, and other earnings.
Senior citizens can utilize Form 15H to prevent Tax Deducted at Source (TDS) on interest earned from fixed deposits, provided their total income is below the taxable threshold. This provision offers significant relief, especially for retirees who rely on interest income as their primary source of funds.
Form 15H is a self-declaration form that senior citizens (aged 60 years and above) can submit to their banks or financial institutions. By doing so, they request exemption from TDS on interest income, under the condition that their total estimated income for the financial year is below the taxable limit. This form is particularly beneficial for those whose income does not exceed the basic exemption limit, thereby ensuring they are not subject to TDS deductions.
Key Benefits Under the New Tax Regime
Under the new tax regime, the basic exemption limit for senior citizens is ₹3 lakh, and for super senior citizens (aged 80 years and above), it is ₹5 lakh. If a senior citizen’s total income, after accounting for deductions and rebates, remains below these thresholds, they can submit Form 15H to avoid TDS on interest income. This is particularly advantageous for those earning interest income from fixed deposits, as banks are required to deduct TDS if the interest income exceeds ₹50,000 in a financial year. By submitting Form 15H, seniors can ensure that their interest income is received in full, without any deductions.
Accurate Income Estimation: Before submitting Form 15H, it’s crucial for senior citizens to accurately estimate their total income from all sources, including pensions, rents, and other earnings. If the estimated income exceeds the exemption limit, TDS will be applicable, and submitting Form 15H may lead to penalties.
Submission Timing: Form 15H should ideally be submitted at the beginning of the financial year or before the first interest payment is credited. Submitting the form early ensures that TDS is not deducted from the outset. However, it can be submitted at any time during the financial year, and the bank will consider it from the date of submission until the end of that year.
Validity: Form 15H is valid for one financial year only. Therefore, it must be submitted annually to continue availing the TDS exemption.
How to Submit Form 15H
Senior citizens can submit Form 15H to their banks or financial institutions either online through the respective portals or offline at the branch. It’s mandatory to provide a Permanent Account Number (PAN) along with the form. Some banks may allow online submission through their official websites, simplifying the process.
Form 15H serves as an effective tool for senior citizens to manage their interest income from fixed deposits without the hassle of TDS deductions. By ensuring that their total income remains below the taxable limit and submitting the form timely, retirees can enjoy their earnings in full, enhancing their financial well-being.
To qualify for Form 15H, two key conditions must be met: the individual must be a resident senior citizen (aged 60 or older), and their estimated tax liability for the financial year must be zero. Additionally, the government has raised the TDS exemption limit for interest income from Rs 50,000 to Rs 1 lakh for senior citizens. This adjustment significantly eases the burden on retirees who rely on interest income, reducing unnecessary TDS deductions and the need for refund claims.
