TDS exemption: Even if you come under the tax slab, you will still get TDS exemption


Tax Deducted at Source (TDS) means the tax which is deducted from any of your income. Many tax payers are troubled by TDS on salary or investment income. To avoid this, you can fill the form for refund from the Income Tax Department. Apart from this, there are many other measures through which you can avoid tax deduction.

When is TDS deducted?

Tax is deducted on income from certain sources after a limit (threshold limit). TDS depends on which bracket the taxpayer falls in. Apart from this, TDS is also different on different types of income. For example, if the dividend i.e. your share in the profit of a share company exceeds Rs 5,000, then the department will deduct TDS on it.

Save TDS by making more than one FD in different banks,

whereas if you earn money from a bank’s savings account, FD or any other scheme, you will still have to pay tax. However it has a limit. This limit is Rs 40 thousand for general citizens, while it is Rs 50 thousand for senior citizens. If your income from these sources goes above this given limit, then your income becomes taxable.

However, this rule applies to interest earned from a bank in a single financial year. That is, if you get FD done in different banks then you can get exemption in TDS. But for this it has to be kept in mind that the FD income in every bank should be less than Rs 40 thousand.

Income on FD is more than Rs 40 thousand, still TDS will not be deducted.

If your income from any FD is more than Rs 40 thousand, but if your income is less than Rs 2.5 lakh in the same financial year, then you can avoid tax by filling Form 15G and 15H. Can get discount.

People like housewives, students are included in this category. Their income is less than Rs 2.5 lakh. But their FD income can be more than Rs 40 thousand. Because the earning person of their house can make FD in their name.

What is TDS?

If the remaining amount is given to you after deducting tax on your income, then the tax deducted is TDS. The government collects taxes through this. It is deducted on different types of income sources. Like salary, interest received on any investment or commission etc. Any institution (which comes under the purview of TDS) making the payment deducts a certain amount as TDS.

What is 15G and 15H?

These forms are a kind of declaration. In order for TDS not to be deducted, a person has to declare that his income is not going to fall in the income tax category in this financial year. He will have to prove with necessary evidence why his tax should not be deducted. After depositing it, TDS is not deducted from your income.

  • Form 15G and 15H have to be filled every year. That means, if you fill one of these forms this year, you will have to fill it again in the next financial year.
  • For Fixed Deposit (FD), this form has to be submitted at the branch where your FD is held. Whereas for TDS exemption on income earned from any share i.e. dividend, this form will have to be submitted to the Registrar. In maximum cases, the registrar will inform the shareholders of the details before receiving the share proceeds.
  • You can fill this form both online and offline. For this you have to provide information about Permanent Account Number (PAN). Apart from this, you have to fill in the details related to your income and investment.