If your wife is a housewife, then this scheme can provide you with a huge benefit, understand the benefits.
When the interest income on fixed deposits is more than the prescribed limit, then TDS is deducted from it. But if you want, you can save this tax with the help of your wife.
Fixed Deposit is a scheme that is still trusted by investors. Despite having many investment options, even today experts talk about including FD in their portfolios. You get guaranteed returns on FD. Also, you get many options for FDs of different tenures. However, the income from FDs with tenure less than 5 years is considered taxable. When the interest income on fixed deposits is more than the prescribed limit, then 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 rule, if the income earned through interest on FD is more than Rs 40,000 annually, then TDS is deducted. If your income comes under the tax bracket, but your wife is a housewife, then you can avoid paying TDS by getting an FD done in the name of your wife. Housewife is not liable for tax. On the other hand, if your wife comes in the lower tax bracket, then also you can stop TDS deduction by getting an FD done in her name. For this, your wife will have to fill Form 15G. If you want, you can also get a joint FD done in the name of your wife, 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 less than the taxable limit and age is less than 60 years, then he has to fill Form 15G to stop TDS deduction. Form 15G is a declaration form under sub-section 1 and 1(A) under section 197A of the Income Tax Act, 1961. Through this, the bank gets to know about your annual income. Through this form, if your income does not fall under the tax purview, then the bank does not deduct TDS on FD.
Also know about Form 15H
Form 15H is for people aged 60 years or above. By submitting it, senior citizens can stop the TDS deducted on FD interest. But this form is submitted only by those 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 such as interest income on loans, advances, debentures, bonds etc. is more than Rs 5,000, then Form 15H has to be submitted.
Form 15H should be submitted before the first interest is paid. Although it is not mandatory. But if you do this, then TDS deduction from the bank can be stopped from the very beginning. If a customer misses to fill these forms, then he can claim TDS in the assessment year in the income tax return. In such a case, a refund will be received from the Income Tax Department.
