AS MENTIONED earlier, many investors try to avoid TDS by splitting their investments across different banks. Many others submit Form 15G or 15H so that their bank does not deduct TDS. These forms are declarations that the individual's income for the year is below the taxable limit and therefore no TDS should be deducted from the interest.

However, misuse of these forms is a serious offence. A false declaration not only attracts penalty but also prosecution. The taxpayer can be sentenced to jail for terms ranging from three months to two years. This doesn't stop people from blindly filling the forms to escape TDS.

You need to meet two basic conditions to file form 15G. One, your taxable income for the year should not exceed the basic exemption of `2.5 lakh. Two, the total interest received during the financial year should not exceed the basic exemption slab of `2.5 lakh. The total interest income includes interest from other sources as well, including PPF, NSCs and not just interest income from deposits.

Form 15H, which is for senior taxpayers above 60, imposes only the first condition.The final tax on the total annual income should be nil. So, senior citizens whose taxable income is below the `3 lakh limit are eligible to file Form 15H. For very senior citizens above 80, this limit is `5 lakh.

Though this is a standard practice, and investors take it lightly, don't assume that the Form 15G and 15H will not get noticed by the taxman."If TDS is not deducted because the person has filed Form 15G or 15H, it is separately shown in part A1 of the Form 26AS.

File Forms 15G only if you fulfill both the conditions.

TDS is an interim tax and you can claim a refund if you have paid more than due.