Income Tax - TDS on interest paid by Banks - Form 15G/15H to be acknowledged
AS Per Section 194A of the Income Tax Act, Banks and Financial Institutions are mandatorily required to deduct TDS on payment of interest exceeding Rs. 10,000/- in a year. However depositors can claim an exemption from Tax Deducted at Source, if they are not liable to pay any Income Tax. Individuals whose income tax liability will be ‘NIL' can file a declaration in Form 15G and senior citizens (above the age of 60) can file the declaration in Form 15H. These forms/self declarations are to be filed with the Banks and once a declaration is so filed, the banks need not deduct TDS for the interest payment.
It is brought to the notice of the RBI that despite submission of Form 15-G/15-H by customers, banks are deducting tax at source, at times, causing inconvenience to customers resulting in a number of complaints. Such instances arise because either the forms are misplaced or a track is not kept of forms received in the branches.
With a view to protect interest of the depositors and for rendering better customer service, RBI has advised banks to give an acknowledgment at the time of receipt of Form 15-G/15-H. This will help in building a system of accountability and customers will not be put to inconvenience due to any omission on part of the banks.