Finance Minister Piyush Goyal in his Budget 2019 speech has proposed to increase the TDS threshold on interest earned\u00a0on bank or post office deposits. The limit is being raised from Rs 10,000 to Rs 40,000. This means on a deposit of nearly Rs 6 lakh at an assumed interest rate of about 7 percent per annum, the annual interest earned will not be subject to TDS. Currently, if the interest earned exceeds Rs 10,000 in a year, there is an incidence of TDS. For calculating TDS, deposits across various branches of the same bank is taken into account. The finance bill 2019 states that there will be amendment in section 194A of the Income-tax Act so as to ease the burden of compliance by way of increasing the threshold limit from Rs 10,000 to Rs 40,000, for deduction of tax at source (TDS) on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office. The interest earned could be from bank fixed deposits, or recurring deposits and even term deposits in post office. Importantly, for interest earned from company fixed deposits, the threshold stands at Rs 5,000 per annum. Non-incidence of TDS till Rs 40,000 of interest in one year, does not make the interest tax-free. One needs to add the interest amount earned under 'Income from other sources' and based on the income slab, this interest is fully taxable. However, if one's income is below the exempted limit and is not liable to pay income tax, the depositor can avoid TDS. To avoid TDS, one needs to submit a declaration in either Form 15G or 15H. While Form 15G is for individuals below 60 years, Form 15H is for individuals above 60 years of age. One can submit these forms only when the tax on total income is nil during the financial year. It has to be submitted every year in case of long term deposits. Therefore, this new proposal will benefit even small depositors and non-working spouses as submission of declaration (Form 15G or 15H ) need not be submitted by them.