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The income tax department has issued a revised Form 15H, using which senior citizens with taxable income of up to ₹5 lakh can claim TDS exemption on interest from deposits.
As announced in this year's interim budget by the then finance minister Piyush Goyal, individuals with annual taxable income of up to ₹5 lakh will get full tax rebate. In the last financial year, the limit for seeking tax deducted at source (TDS) exemption was ₹2.5 lakh.
The Central Board of Direct Taxes (CBDT) has recently issued a notification amending Form 15H according to the budget announcement.
The finance ministry has now amended Section 87A of the Income Tax Act under which a resident individual, having total income of up to ₹5 lakh, shall be entitled to a rebate of an amount being the amount of tax chargeable or ₹12,500, whichever is less.
The amendments by the CBDT states that banks and financial institutions would accept Form 15H from assessees whose tax liability is 'nil' after considering rebate available under Section 87A of the Income Tax Act, 1961.
The old Form 15H did not took into account the maximum allowable rebate of ₹12,500.
The revised Form 15H can now be submitted in banks and post offices to claim exemption from TDS on interest income on deposits. Senior citizens, above 60 years of age, have to submit Form 15H to banks at the beginning of a financial year to ensure that no tax is deducted at source on interest income.
Nangia Advisors (Andersen Global) Executive Director Neha Malhotra told PTI that had this change not been brought, taxpayers earning income up to ₹5 lakh would have suffered TDS on interest from banks and would have had to file a tax return to claim refund of such TDS.
"This change not only saves the taxpayer from the hassle of filing ITR to claim refund but also reduces the administrative burden of CPC (central processing centre) to process such returns and issue refunds," Malhotra said.