Banks have the privilege to deduct a collection of revenue income officially termed TDS, which is a method of collecting tax on one’s interest income. Also, there’s an exemption limit of Rs. 2,50,000 to 4,00,000 under which, if your overall income falls, the same is charged.
According to Section 393(1) Table Sl. No. 5(ii) (Earlier 194A) of the IT Act, 1961, Banking Companies or Co-operative Societies governed by the RBI and Post Office are ordered to debit TDS when interest income exceeds Rs 50000 per year. (100,000/- in case of a senior citizen). In other cases limit is Rs. 10,000 from F.Y 2025-26.
Even if the amount of interest is very considerable, any TDS on interest credited to your savings bank account won’t be deducted by the banks.
When FDs are made for a more extended period of time and you’ll get the amount only when it matures, in that case, tax at source on the interest added up will be deducted by the bank for the year. However, no interest has been paid to you.
But, there is a criterion via which you can save your interest from banks–
Due Date for Filing of Form 121 (Old 15G & 15H)
| Date of ending of the quarter of the financial year | Due Date |
|---|---|
| 30th June | 15th July |
| 30th September | 15th October |
| 31st December | 15th January |
| 31st March | 30th April |
Filing Process of the Form 121 (Old 15G & 15H)
Form 121 (Old 15G & 15H) are self-declaration forms to declare that their total estimated income for a particular year does not exceed the Basic Exemption limit, including such interest income provided by a bank, which is required to be submitted by the assessee so that he/she can be rid of the TDS deduction on interest on fixed deposit. Basically, banks ask the depositors to submit these forms each year, and they have certain specific rules. Form 121 is applicable for both senior citizens & other resident.
Note Worthy:
- Make sure you submit the details of your PAN card when the forms are being submitted. The drawback of not submitting the PAN card is that your TDS will be deducted @20% rate, 10% more than the usual rate, regardless of the fact that you have submitted Form No 121. While submitting the forms, it is always advised to get a response from the bank about the same.
- Always submit Form 121 quarterly so that banks cannot deduct the tax before the submission.
- Sometimes, banks may deduct tax even when you have deposited the forms; in that case, the deducted amount will not be refunded because the tax has already been submitted to the government. The only solution to this is to file your IT return, and after that, claim it as a TDS refund.
- Both the stated forms have a one-year validity period. If your financial year expires, you must resubmit Form 121 if you want a nil TDS reduction for the fresh year.
Check Also: Due Dates for E-Filing of TDS/TCS Return and 15G/15H Form
Dear sir, I have one query regarding tax on Pf. I worked in a company for 6months and then resign and joined another organization but at that time neither I withdraw my Pf amount nor transfer to my present company. After 6years earlier company released my Pf after deducting some TDS. But while filing income tax I found that the same deducted TDS is getting a refund. But what I read is before completing 5years of service if anyone leaves he has to pay tax on Pf amount. Please clear
Hi,
I have a query on PF loan. I want to get a loan from my PF account for home repayment. For this, 5 yrs service needs to be completed in the same company and then only we can get the loan without any TDS.
Currently, I am working on an X company for 4 yrs, if I change my Job to another employer now, will I be able to apply/get the loan after 1 year from same PF account without any TDS? that means after 5yrs (4+1). Request you to clarify my query.
Appreciate your help!!
Thanks,
Thiru
To avail loan for the purpose of purchase of house/flat, construction of site and acquisition of plot,, an employee must serve a minimum of 5 years of “continuous service” and can withdraw the employees share along with interest or total cost, whichever is lesser. Since the word “”continuous service” includes employment with multiple employers, you can avail a loan after 1 year. No TDS will be deducted.