Form 15G/15H – Save TDS on Interest Income

In the present day, every businessman must be attentive about Form 15G as well as Form 15H which are used to avoid Tax Deducted at Source (TDS) deduction at the time of calculating the amount of interest earned within that financial year. In this article, we will discuss significant points to keep in mind during submission of Form 15G and Form 15H.

What is Form 15G / 15H?

Form 15G / 15H is a declaration which is submitted by the depositor to the bank in an approved form where they assume that their sum total taxable income is less than the maximum exemption limits i.e. Rs. 2,50,000 in Financial Year 2014-15. Consequently they are not chargeable to income tax and the bank must not deduct TDS on the amount of interest earned by them. This declaration contains personal details like name, PAN and address along with the details of FDRs held at the bank branch. However, for senior citizens, the obligatory Form to evade TDS is 15H.

Significance of Form 15G and Form 15H -

TDS is deducted on the amount of interest paid, above Rs. 5,000 (if the deposit is made in private firms) or Rs. 10,000 (if the deposit is made in bank). But, the payee can avoid TDS by submitting Form 15G / 15H. As explained above the individual declares in Form 15G / Form 15H that his sum total taxable income is less than the maximum exemption limit, therefore the bank does not deduct TDS from interest payments accrued to him.

Both these forms need to be filed in triplicate copy and the moment the payer (like bank, company or post office) receive them in their record, the total interest is ought to be compensated to the depositor with no TDS.

Thus submission of Form 15G benefits the individual in 2 ways:

  1. He gets a chance to avoid TDS from Interest payments.
  2. Since the person who is submitting Form 15G has income below taxable limit and further he or she doesn’t expect or is entitled to any refund as no TDS gets deducted (as he or she has filed Form 15G), he is not forcibly required to e-file Income Tax Return.

Certain precautionary measures must be taken while submitting both these forms. If a wrong Form is filed devoid of being eligible to do is considered illegal and may involve interest payment on the amount of tax payable. It may also attract punishing consequences.

Who can Submit Form 15G?

The following individuals can submit form 15G if their taxable income is less than maximum exemption limit chargeable to tax as per income tax slabs.

  1. An individual below 60 years of age, who is a resident of India is may submit Form 15G. Subsequently, an NRI is also not liable to submit this Form.
  2. HUF (Hindu Undivided Family).

Who can Submit Form 15H?

An individual (resident of India) who is above 60 years of age can submit Form 15H provided his / her tax liability on the anticipated income is NIL for that financial year.

Difference between form 15G & Form 15H -

The basic circumstances under which Form 15G / 15H are filed are approximately same yet there are few differences that needs to be pointed out carefully. In normal course of action, lots of taxpayers end up filing any one of these Forms while they are not entitled to do so or vice-versa. Now let’s have a look at the major differences between Form 15G and 15H:

  1. Form 15G is basically meant for non-senior citizens below 65 years of age whereas 15H is intended for senior citizens (above 60 years of age).
  2. Form 15G may be submitted by HUF’s as well but Form 15H can only be submitted by an Individual above 60 years of age.
  3. Form15G cannot actually be filed by any individual whose income through interest on securities / interest apart from “interest on securities” goes beyond the pertinent essential exemption limit.

When and Where to Submit Form 15G / 15H?

There are certain points that an individual needs to keep into consideration:

  1. Form 15H must be submitted to the Banker / Company, where the deposit has been made. For instance, if you have deposited in 3 ICICI bank branches Rs.100000 each then you need to submit Form 15H to each of these branches. Submission of this Form is also necessary before 1st payment of interest. Though it is not necessary but it avoids TDS deduction.
  2. The Forms must be submitted in Triplicate. The First copy of it is passed on to the Income Tax (IT) Department, the second copy is retained with the bank branch and the 3rd copy is for your own records which serves as acknowledgement from the bank branch for receipt of form.
  3. The form must be preferably submitted at the starting of the financial year or even during the period of deposit itself in order to avoid a state where the payer has by now deducted the tax prior to its receipt.

Other Relevant Points about Form 15G / 15H -

  1. Permanent Account Number is Necessary: An individual needs to make sure that he or she submits the Permanent Account Number (PAN) detailing to the bank when submitting Form 15G / 15H. If in any case, an individual fails to provide PAN details to the bank, then the bank is liable to deduct TDS at 20% against the relevant rate of 10% even if he or she has submitted the Form 15G / 15H.
  2. Avoids TDS but does not Save Tax: Form 15G / 15H assists in evading TDS but it does not facilitate in saving taxes.
  3. Separate Form for each branch: If an individual is making Fixed Deposit (FD) in diverse branches of the same bank, then it is mandatory to submit these forms at each branch where deposit has been done.
  4. To be submitted every year: It is important to note that new set of these Form are mandatory to be filed every year but the eligibility condition needs to be examined prior to its furnishing. These Forms are valid for that financial year in which it has been furnished. The assessee ought to submit the Forms if he or she desires to receive the interest devoid of deduction of tax at source.
  5. False Declaration: Any kind of false or artificial declaration is sure to attract penalty u/s 277 and thus it is advisable that an individual must not sign it blindly. The false declarations are liable for hearing which may range between 3 months - 7 years owing to the quantum of non-payment. Moreover, the taxpayer can also be penalized with painstaking imprisonment not considering the fact that such false details were provided deliberately or not deliberately since Ignorance of Law is no defense.
  6. Acknowledgement Form: Make sure to acquire acknowledgement for Form 15G / 15H when submitting it. Hence, it is recommended to submit the Form personally in order to ensure appropriate acknowledgement.

The above article will help you understand about Form 15G / 15H and certain conditions that you need to comply with. Besides, you also need to take some precautionary measures at the time of filing of these Forms so that you do not get into any kind of problem. Download Form 15G in word format.

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