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Income Tax Save: Fixed deposit is a scheme on which investors still trust. Despite having many investment options, even today experts talk about including FD in your portfolio. You get guaranteed returns on FD. Also, you get many options of FD of different tenures. However, income from FD with a tenure of less than 5 years is considered taxable. When the interest income on fixed deposits exceeds the prescribed limit, TDS is deducted from it. But if you want, you can save this tax with the help of your wife. Understand how-
This is how you can save tax
According to the rules, if the interest received on FD is more than Rs 40,000 annually then TDS is deducted. If your income falls in the tax bracket, but your wife is a housewife, then you can avoid paying TDS by getting an FD made in your wife's name. There is no tax on housewives. At the same time, even if your wife falls in the lower tax bracket, you can avoid deducting TDS by getting an FD made in her name. For this your wife will have to fill Form 15G. If you want, you can also get a joint FD made in your wife's name, but in this you will have to make your wife the first holder.
What is the use of Form 15G?
If a person's income is below the taxable limit and age is below 60 years, then he will have to fill Form 15G to stop TDS deduction. Form 15G is a declaration form under sub-sections 1 and 1(A) of Section 197A of the Income Tax Act, 1961. Through this the bank comes to know about your annual income. Through this form, if your income does not come under the tax net, then the bank does not deduct TDS on FD.
Also know about Form 15H
Form 15H is for people aged 60 years and above. By depositing it, senior citizens can stop TDS deduction on FD interest. But this form is submitted only by those people whose taxable income is zero. The form has to be submitted in all the bank branches from where the money is being deposited. If the interest income from any source other than deposits like loans, advances, debentures, bonds etc. is more than Rs 5,000, then Form 15H is to be submitted.
Form 15H should be submitted before the first interest payment. However it is not mandatory. But if you do this then TDS deduction from the bank may be stopped from the beginning. If a customer fails to fill these forms then he can claim TDS in the assessment year in the income tax return. In such a case, you will get a refund from the Income Tax Department.