Request for Lower Deduction of TDS on FD

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  1. sindagi s s

    sindagi s s New Member

    A senior citizen's only source of income is from interest on bank FDs. If his interest income during FY 15-16 is Rs.6,48,000 and he contributes Rs.1,50,000 to PPF. then the tax +cess payable by him works out to be Rs. 18,334 ( after rebate of Rs.2000 as his taxable income is Rs.4,98,000 ie less than Rs.5 lakh ). IF all his FDs are only in one bank and since he is not elligible to submit Form 15H, the bank will deduct Rs. 64,800(10%) as TDS. Is there any way to reduce the TDS to the actual tax plus cess payable by him( in this case Rs.18334)? If there is no way, then an amount of Rs.46,466 will be locked with the income tax dept. till gets the refund. Please suggest a suitable solution for above case and scenario(ie FDs in one bank only). Thanks to the adviser in advance.
     
    Last edited: Feb 21, 2016
  2. V K Khanna

    V K Khanna Active Member

    This is unavoidable. Even if you stagger your FD amount in different banks, TDS would be applicable if the total interest amount exceeds Rs 10,000 PA. A similar situation is being faced by many senior citizens.
     
  3. ZED

    ZED Well-Known Member

    Respected Sirs, I believe that although benefit u/s 197A [submission of form 15 G / H] is not available , still the assessee can opt for claiming benefit u/s 197


    197. (1) Subject to rules made under sub-section (2A), where, in the case of any income of any person or sum payable to any person, income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194K, 194LA and 195, the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.

    (2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be.

    (2A) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.


    Form 13
    http://www.incometaxindia.gov.in/forms/income-tax rules/103120000000007840.pdf
     
    V K Khanna likes this.
  4. Piyush Chawla

    Piyush Chawla Active Member

    Yes, I think benefit under Section 197 would be available in this case.

    The assessee would be required to submit Form 13 for Lower Deduction of TDS.

    Not sure though.

    Maybe @Chandrashekar M Sir would be able to guide us better in this regard
     
  5. V K Khanna

    V K Khanna Active Member

    I have a doubt whether the present case can be covered under Sec 197 as the assessee's case already falls under the lowest slab rate of 10%.

    The 10% TDS rule hurts senior citizens most because their income is mostly from interest on deposits. The Easwaran Committee set up by the Govt was seized with this issue. The Committee in its report released last month, has recommended that the TDS on interest be cut down to 5% instead of 10% at present.

    Let us hope if this recommendation finds place in the budget 2016.
     
    Last edited: Feb 22, 2016
  6. sindagi s s

    sindagi s s New Member

    Thanks to all the members for their detailed analysis and clarification on the above case... s s sindagi
     
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