Question: Dear Sir/Madam,I am a regular reader in your site and it is very informative. i would like to ask about a question about TDS on FD deposit:
1. I have a some fixed deposits in the name of my wife at Federal Bank in Kerala and there some TDS Tax deducted on deposits. Is there any way to claim that TDS tax as she doesn't have any other income and she has PAN card as well ? Is there any way to avoid such TDS in the future ?. She is having investment in mutual fund-ELSS. whether it will be helpful to claim that TDS ?
2. Regarding My Case, I am an NRI and I have some NRO deposits in Federal Bank. It attracts TDS @10 % or something in that range even after mentioning my PAN card.Ipay Rs.10000 every year as Life insurance premium to LIC. Is there any way to claim this TDS, too? Kindly note that we dont have any other income from anywhere and both of us have PAN card. We do not come under high tax bracket as we dont have any other income. We would appreciate if you suggest the ways to claim these TDS and ways to avoid such TDS Tax.
Answer: Yes, there is a way to avoid TDS i.e. by submitting the 15 G form to the Banker. As per the Income Tax guidelines, banks are required to deduct TDS on deposits if the total interest earned in a given financial from all the deposits exceeds Rs.10,000. TDS Rate is 10% plus education cess 0.3% (3% on 10) total 10.3%.But, if your income is within the maximum tax exemption limit, then you may inform your bank about the same by submitting the 15G (form available at the bank).
Investment in mutual funds-ELSS will not help you in claiming TDS. The only way to claim the TDS is by filing a return showing taxable income within the tax exemption limit and then claiming the TDS through Form 16A which the banker issues when TDS is deducted.
For the Second question, an NRI can file form 15 G provided your income fall within the maximum tax exemption limit.
You can avoid TDS from your deposit by splitting your bank deposits in two or more banks or branches, so that the total interest earned at one branch or bank is less than Rs.10000 in given financial year.
Click here to check out the tax saving options for NRIs.