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Interest income from deposits

An individual has to file return voluntarily under Sec. 139(1), where his income exceeds the “maximum amount which is not chargeable to income tax”. Such limit for the current assessment year (AY) 2007-08 covering the income of financial year 2006-07 for a senior citizen, who is a resident in India and is 65 years old or more is Rs. 1.85 lakh. For AY 2008-09, the limit has been increased to Rs. 1.95 lakh. If the reader’s income through interest from deposits, which is stated to be the only source of income, exceeds such limit, he would be required to file an income-tax return.

As for the reader’s wife, who is stated to be a house wife, if she is not a senior citizen, the limit is Rs. 1.35 lakh and Rs. 1.45 lakh for AY 2007-08 and AY 2008-09, respectively. If she is a senior citizen, the limit as applicable to the reader will be applicable to her as well.

The limit, it may be added, is of the net income after deduction under Chapter VI-A, which, inter alia, includes Sec. 80C.

A declaration in Form 15H may be filed by a senior citizen with the person responsible for payment of interest, so as to avoid tax deduction at source, if there be no tax liability. In other words, the total income after deductions in Chapter VI-A should not exceed the exemption limit.

All that is required is a declaration in the Form that the tax payable for the total income will be nil. There is no limit on the tax deductible amount for which such declaration can be filed.

In the case of assessees other than senior citizens, the relevant form is Form 15G (unlike Form 15H for senior citizens), places a limit for the aggregate amount for which this declaration could be filed being interest on securities, other interest income, income from mutual funds or income from National Savings Certificate 1987 covered by Sec. 80CCA. Such aggregate amount should not exceed the exemption limit of Rs. 1.10 lakh for men and Rs. 1.45 lakh for women for AY 2008-09.

An assessee, who is not a senior citizen has not only to declare in Form 15H that his total income does not exceed the exemption limit, but also that income from the aggregate of the above categories of receipts liable for tax deduction does not exceed the exemption limit. It follows that in the case of senior citizens, such income liable for tax deduction at source may exceed the exemption limit, but his total income should fall below the exemption limit.

This could happen, where the senior citizen has deductions under Chapter VI-A, so that the receipts liable for tax deduction may exceed the exemption limit, but his total income may not so exceed.

As for the other query, the declaration in Form 15G or 15H need not be signed by the nominee.

S. RAJARATNAM

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