Avoid TDS on Bank Interest, Rent, Dividends: How to Declare Nil Tax Liability

If you're an ordinary saver or taxpayer expecting no tax liability this year, you can avoid Tax Deducted at Source (TDS) on certain incomes. This is possible by submitting a specific declaration to the entity paying you the income.

This mechanism primarily benefits individuals whose total estimated income falls below the taxable threshold, meaning they won't owe any income tax for the year. By submitting the correct form, they can prevent TDS from being levied on their earnings like bank interest, rental income, and dividend payments.

The relevant form for this purpose is Form 121. The source summary indicates it clarifies who is eligible to submit this form, which specific income types are covered under its provisions, and what detailed information is required from the taxpayer. Furthermore, it outlines the responsibilities of the payer once they receive this declaration.

This process ensures that individuals with nil tax liability do not have their income unnecessarily blocked by TDS, which would otherwise require them to claim a refund later.

What to watch: Ensure timely submission of Form 121 to relevant payers.

Editor's note: The draft correctly summarizes the process for avoiding TDS as described in the source.

This article is AI-generated and fact-gated. Original reporting: Livemint Money