According to The Income Tax Act, 1961, every person has to pay a tax on the income they earn in one financial year called the Tax Deducted at Source Or TDS. The entity paying the salary cuts the tax. The most common example is the tax deducted from the interest earned by a person from a bank in one financial year. However, under certain conditions, the person may not have to pay the tax. In that case, the taxpayer has to submit applications, namely form 15G (for ages below 60) and form 15H for ages above 60) declaring himself non-taxable. In this content, we will tell you how to utilize form 15H the most.
How to utilize Form 15H the most
TDS on EPF Withdrawals
If a person wishes to withdraw EPF (employee provident fund) balances before the completion of five years of continuous service in a particular organization, TDS is applicable on the EPF. However, if the EPF of the person has exceeded INR 50,000 and wants to withdraw it before 5 years, then he can do so without TDS. In that case, he has to submit form 15H to avoid tax deduction. But one should keep in mind that his total taxable income(inclusive of EPF balance) should not be taxable.
TDS on income generated from corporate bonds
TDS is applicable on corporate bonds when the income generated from them exceeds INR 5000. But if the total taxable income inclusive of the corporate bond income is below the taxable limit, the person can submit form 15H to request non-deduction of tax from corporate bonds.
TDS on income generated from Deposits made in post offices
TDS is sometimes deducted by certain digitized post offices on the income generated from deposits made by them at the post office. If the total taxable income is below the taxable limit, you can submit form 15H to avoid tax deductions.
TDS on rent
When the rental payment exceeds Rs. 1.8 lakh in a year, the individual has to give a TDS on the income. However, he can submit form 15H to his tenant, provided that the tax paid on his total income in the previous year is zero.
TDS on insurance commission
Section 194D of the Income Tax Act, 1961 says that if the insurance income exceeds INR 15000, then the person has to pay tax. TDS is deducted at a rate 5% for an individual and at 10% for a domestic company. A senior citizen can avoid the deduction by submitting form 15H.
TDS on Insurance Maturity Receipts
TDS is deducted on the income generated from the proceeds paid or payable on maturity since September 1st, 2019. The rate of TDS deduction is 5%. However, if you submit form 15H, you are not liable to pay tax.
TDS on Fixed Deposits
The tax exemption limit on the interest income for senior citizens is INR 50000. But there are certain limits on total taxable income. For ages above 60 and below 80, the limit is 3 lakhs and for ages above 80, the limit is 5 lakhs. If the total income is below this limit, the person is not liable to pay tax even if the interest income exceeds INR 50000. He has to submit form 15H to the bank. You have to submit one form to each of the banks in which you have an FD.
It is ideal if you submit the form at the beginning of the financial year. You have to submit before the close of the financial year. Tax will be deducted at the rate of 20% if your PAN card is found to be wrong. You may be subjected to imprisonment and judicial punishments under section 277 if some wrong/false declarations are found in the form. So be careful while filling in the details of the form. If you follow these simple steps, you can make the most of form 15H!