Senior citizens in India are entitled to certain tax benefits, including an exemption from Tax Deducted at Source (TDS) on interest earned from fixed deposits. This exemption can be claimed under Section 80TTB of the Income Tax Act, 1961. However, there are certain conditions that must be met in order to qualify for this exemption.
Conditions for TDS Exemption
- The senior citizen must be a resident of India.
- The senior citizen must be 60 years of age or older.
- The interest income from all fixed deposits combined must not exceed Rs. 50,000 in a financial year.
- The fixed deposit must be held in a bank or post office.
How to Claim TDS Exemption
To claim TDS exemption, senior citizens must submit Form 15H to the bank or post office where the fixed deposit is held. Form 15H is a declaration that the senior citizen meets the conditions for TDS exemption.
Consequences of Not Claiming TDS Exemption
If a senior citizen does not claim TDS exemption, the bank or post office will deduct TDS at the rate of 10% on the interest earned from the fixed deposit. This can result in a significant reduction in the amount of interest received by the senior citizen.
Tips for Avoiding TDS on Fixed Deposits
- Keep interest income below Rs. 50,000: Senior citizens should ensure that the interest income from all fixed deposits combined does not exceed Rs. 50,000 in a financial year. If the interest income is likely to exceed this limit, consider investing in other tax-saving instruments, such as Public Provident Fund (PPF) or National Savings Certificate (NSC).
- Spread investments across multiple fixed deposits: Instead of investing a large sum of money in a single fixed deposit, senior citizens can spread their investments across multiple fixed deposits. This will help to keep the interest income from each fixed deposit below the Rs. 50,000 limit.
- Invest in tax-saving fixed deposits: Senior citizens can also invest in tax-saving fixed deposits, which offer a deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. The interest earned from tax-saving fixed deposits is also exempt from TDS.
- Submit Form 15H: Senior citizens must submit Form 15H to the bank or post office where the fixed deposit is held in order to claim TDS exemption. Form 15H can be downloaded from the website of the Income Tax Department.
By following these tips, senior citizens can avoid TDS on fixed deposits and maximize their interest earnings. It is important to note that the rules and regulations regarding TDS exemption may change from time to time, so it is advisable to consult with a tax professional for the most up-to-date information.
Senior CItizen Interest Income Tax Rules 2024 | FD & Saving Account – TDS and Income Tax Rules 2024
FAQ
How can I avoid TDS on fixed deposit interest?
Is 80TTB deduction for senior citizens?
What is the limit of TDS deduction?
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TDS Section
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TDS Rate
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Limit
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194C
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1% to Individual / HUF 2% to other entities
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Rs 30,000/ Year
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194J
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10%
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Rs 30,000/ Year
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194Q
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0.1%
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50 lakhs
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194H
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5%
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Rs 15,000
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How can senior citizens avoid TDS deduction?
Tax experts say these senior taxpayers falling in 5% slab can avoid TDS deduction @10% by filing Form 12BBA, so that they don’t have to claim refund at a later stage. This is a major relief for senior citizens as they will not have to forego the compound interest on the excess TDS amount.
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How senior citizens can avoid 10% TDs on fixed deposits?
1 min read . Updated: 18 Apr 2022, 12:10 PM IST Shipra Singh This year onwards, senior citizens aged 75 years and above looking to get exemption from filing income tax should fill and submit form 12BBA with their respective banks
Can senior citizens claim FD interest without TDS?
Yes, you can claim tax deductions to receive FD interest without any TDS, even if the income is below taxable limit, then you need to submit form 15G and senior citizens need to submit form 15H. Who is exempt from senior citizen return filing?