Banks follow a practice of deducting TDS on the interest payouts on the deposits (like FD etc)of their customers ,before making the interest payout. This is as per the law, which banks follow. But, this also causes problem to lot of people , who are not in the tax paying income bracket i.e thier annual income is not above Rs 1.5 lakhs for males and Rs 1.8 lakhs for females. All such people, who are not in the tax paying bracket , are not supposed to pay any income tax on the interest earned over thier deposits with the banks. But , banks still deduct TDS on the interest and the same has to be claimed by the assessee while filing his/her income tax return. The income tax department, however, refunds this later.
All this casuses lot of inconvenience to the common man, who has to go through arduous process of TDS refunds from IT department. However, acknowledging this fact, IT department has provided for a way out for all such people . Those whose annual income is below the taxable income limit prescribed the government can submit Form 15G to their banks asking them not to deduct TDS on their income interest. This form can be downloaded from the incometax website.
After you submit this form, the banks will not deduct TDS on the interest earned and you can then save yourslef from the misery of going through the whole process of claiming refund from IT dept. However, for all those whose annual income is withing tax payable limit, this is not applicable.