Interest earned from deposits with banks and non-banking finance companies are paid out only after tax deducted at source (TDS). TDS is applicable if the interest income exceeds a specified level. Currently, this is Rs 10,000 for deposits with banks and Rs 5,000 for deposits with NBFCs.

The investor discloses TDS paid at the time of filing returns, by submitting the certificate of deduction which is received from each entity that has deducted TDS. The individual has to then apply for a refund of tax paid as TDS. The reduced income due to the TDS and the delay in receiving refunds may be difficult for people who depend upon the income from fixed deposits to meet their regular income needs.

For such investors, TDS on interest receipts can be avoided by submitting a declaration in forms 15H or 15G, as applicable, to the entity that is deducting the tax.

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Source:http://economictimes.indiatimes.com/personal-finance/tax-savers/tax-news/refund-of-tax-deducted-at-source/articleshow/8724890.cms