TDS- INTEREST ON BANK DEPOSITS: Banks deduct tax (TDS), if the total interest earned on all your fixed

deposits in the bank is greater than Rs.10,000/- during a financial year. The tax liability for the purpose of TDS is determined at the branch level. Whenever the bank pays an interest on your fixed deposits, it checks it for TDS eligibility. If it qualifies, the TDS is deducted. TDS is also deducted on interest accrued (but not yet paid) at the end of the financial year viz. 31st March every year. The rate at which TDS is deducted varies according to the category of account holders. In case of resident individual and HUF, for payments upto Rs. 10 lacs, TDS are deducted at a rate of 10% plus education cess of 3% (thus total deduction is at the rate of 10.3%). However, for resident individual or HUF with interest payments equal to Rs.10 lacs or more, the TDS rate is 10%, plus surcharge of 10% and educational cess of 3% (thus total deduction is at the rate of 11.33%). Thus, the present applicable rates are: Resident Individuals & HUF Payment upto 10 lacs Payment equal to & above 10 lacs Tax Rate Surcharge Education Cess 10% 10% ---10% 3% 3% TOTAL 10.30% 11.33%

If one feels that your total interest income for the year will not fall within overall taxable limits, then one should inform his / her bank not to deduct TDS on deposit, by submitting a form as per the provisions of the Income Tax Act. The forms required for different categories have been listed below: Category of Account Form Required Individual 15H Remember that : (a) You have to obtain 15AA Form from the Assessing Officer of Income Tax department. (b) Even if you submit the 15H / 15AA Form, the tax which has already been deducted by way of TDS during the year prior to submission of 15H Form, is usually not refunded by the bank as they are under obligation to deposit this TDS within a time bound period. . However Certificates will be issued to the customers which can be used while filing his/her tax return. Trusts 15AA

15H/15AA Forms are valid only for the particular financial year in which they are issued. Usually banks ask that a fresh15H form is needed to be furnished for each deposit that is placed with the Bank However, if the depositor furnishes form 15H (which is available free of cost from all banks) and therein declares he / she does not have tax liability at all, the bank will not deduct any TDS from the interest earned by the depositor. Thus, the above, in a nutshell indicates that if the interest income from a bank branch is more than Rs.10, 000/- (and you have not submitted form 15H), the Bank will deduct the TDS. For any TDS deducted by the bank, it will issue a Form 16A which can be used while filing the income tax returns. Thus, in case you do not want the TDS to be deducted, you can split your Bank Deposits in two or more Banks or branches so that the total interest earned at one branch is less than Rs.10,000/-. (However, remember this does not mean that income earned from such deposits is exempted from income tax. You have to club all such interest income and add to your other income, and pay the tax while filing the income tax return.) Difference between form 15G and 15H The form 15G and 15H are submitted to banks by depositors who do not want that TDS be deducted from their interest earned on fixed deposits. A person who is below 65 years can file the Form 15 G. However, only a person of 65 years or more is eligible to file Form 15 H .However, this is not the only difference, but some other major issues relating to 15G and 15 H. are discussed below:15G CAN NOT BE filed by any person who gets AGGREGATE income from Dividend or Interest or Interest other than Interest on securities or on Securities or withdrawal or surrender value of pension plan of insurance for which deduction u/s 80CCA was availed, exceeds Rs 1,00,000 (maximum exempt) ; or tax on estimated total income including the income for which 15G is submitted of is NOT nil. In nutshell we can say that anybody whose tax on estimated income is not NIL or having income from interest or surrender value of pension plan above Rs 1,00,000/-, can not file DECLARATION u/s 15G .This is clear from the point 3 & 4 of the of From 15 G .

However, if you are eligible and also fulfill the condition, the payer can not deduct the tax even if it is above 10,000 Senior Citizen who are only eligible to file the Declaration in Form 15H has no such conditions .This form can be submitted by senior citizen only if t tax on estimated income of the senior citizen is NIl. This is clear from point 4 of the form 15H, which reads as under:" 4. that the tax on my estimated total income, including *income/incomes referred to in the Schedule below computed in accordance with the provisions of the Income-tax Act, 1961, for the previous year ending on relevant to the assessment year _____________ will be nil"