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Form 15G and Form 15H: How to Save TDS on Interest Income

The Indian Income Tax Act mandates banks to deduct Tax Deducted at Source (TDS) when an individual's interest income exceeds a certain threshold. For individuals other than senior citizens, this threshold is Rs. 40,000 per year, while for senior citizens, it is Rs. 50,000 per year, as per section 194A of the Income Tax Act. However, if your total income falls below the taxable limit, you can submit Form 15G or Form 15H to the bank and request them not to deduct any TDS on your interest income.

What are Form 15G and Form 15H?

Form 15G and Form 15H are self-declaration forms that individuals can submit to the bank to request the non-deduction of TDS on their interest income. These forms are applicable when an individual's income falls below the basic exemption limit, which is Rs. 2.5 lakh for the financial year 2020-21 (AY 2021-22). It is important to note that only residents can avail the benefits of Form 15G and Form 15H, and these forms cannot be used by non-residents.

Form 15G

  • Applicable for: Resident individuals or Hindu Undivided Families (HUF) or trusts or any other assessee (excluding companies and firms) below the age of 60 years.
  • Conditions: Tax calculated on the total income should be nil, and the total interest income subject to TDS should be less than the basic exemption limit.

Form 15H

  • Applicable for: Resident individuals aged 60 years or above (senior citizens).
  • Conditions: Tax calculated on the total income should be nil, and there is no requirement for the interest income to be below the basic exemption limit.

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

Form 15G and Form 15H are valid for one financial year. It is advisable to submit these forms at the beginning of each financial year to ensure that the bank does not deduct any TDS on your interest income. Some banks even provide the option of submitting these forms online through their website.

For the financial year 2020-21, the due date for filing Form 15G/Form 15H has been extended to 30th June 2021 from the original deadline of 31st March 2021 due to the impact of the second wave of COVID-19.

What Happens If You Forget to Submit Form 15G or Form 15H?

In case you forget to submit Form 15G or Form 15H on time, the bank may have already deducted the TDS. However, depending on your situation, you can take the following steps:

  1. File your income tax return to claim a refund of TDS: The only way to seek a refund of excess TDS deducted is by filing your income tax return. Banks and other deductors are not authorized to refund TDS directly as they have already deposited it with the income tax department. The income tax department will refund the excess TDS after you file your return.
  2. Submit Form 15G or Form 15H immediately: Most banks deduct TDS on a quarterly basis. If you forget to submit these forms, you can still submit them as soon as possible to ensure that no further TDS is deducted for the remaining financial year.

Where Else Can You Submit Form 15G and Form 15H?

While banks are the primary entities where you can submit Form 15G and Form 15H to prevent TDS deduction on your interest income, there are a few other scenarios where you can also submit these forms:

  1. TDS on EPF withdrawal: If you plan to withdraw your EPF balance before completing five years of continuous service, TDS will be deducted on the balance. However, if you have less than five years of service and plan to withdraw an amount exceeding Rs. 50,000, you can submit Form 15G or Form 15H to prevent TDS deduction.
  2. TDS on income from corporate bonds: If you hold corporate bonds and your income from them exceeds Rs. 5,000, TDS will be deducted. You can submit Form 15G or Form 15H to the issuer of the bonds to request non-deduction of TDS.
  3. TDS on LIC premiums: If the amount received from an insurance policy exceeds Rs. 1 lakh and the maturity proceeds are taxable, 2% TDS will be deducted by the insurer. From September 1, 2019, TDS has been increased to 5% on the amount of income comprising the maturity proceeds.
  4. TDS on post office deposits: Digitized post offices also deduct TDS on deposits. You can submit Form 15G or Form 15H to the post office if you meet the conditions for submitting these forms.
  5. TDS on rent: If you receive rent exceeding Rs. 2.4 lakh annually, TDS will be deducted by the tenant. However, if the tax on your total income is nil, you can submit Form 15G or Form 15H to request the tenant not to deduct TDS. This provision is applicable from April 1, 2019.
  6. TDS on insurance commission: If your insurance commission exceeds Rs. 15,000 per financial year, TDS will be deducted. However, insurance agents can submit Form 15G or Form 15H to request non-deduction of TDS if the tax on their total income is nil.

It is important to note that as a TDS deductor, the Income-tax Act requires you to allot a Unique Identification Number (UIN) to everyone who submits Form 15G or Form 15H. You must file a statement of Form 15G/Form 15H on a quarterly basis and retain these forms for seven years.

How to Fill Form 15G?

Form 15G must be filled accurately to ensure that your request for non-deduction of TDS is processed correctly. Here's a step-by-step guide on how to fill Form 15G:

  1. Name of Assessee (Declarant): Enter your name as per income tax records and the PAN number as per your PAN card.
  2. Status: Indicate whether you are an individual or HUF.
  3. Previous Year: Input the current financial year for which you are filing the form.
  4. Residential Status: This form can only be filled by residents.
  5. Address Details: Fill in your address details, including the PIN code, email, and telephone number.
  6. Assessed to Tax: If your income was above the taxable limit in any of the past six years, answer "yes" to this question.
  7. Latest Assessment Year: Mention the latest year in which your income exceeded the taxable limit.
  8. Estimated Income: Fill in the sum of interest or other income for which TDS should not be deducted.
  9. Estimated Total Income: Calculate your total income from all sources, including salary, stipend, interest income, and any other income earned during the year. Include the income mentioned in point 8 above.
  10. Details of Form 15G Filed: Mention the total number of Form 15G filed during the previous year and provide the aggregate amount of income for which Form 15G was filed.
  11. Details of Income: Provide the relevant investment/account details, nature of income, section under which tax is deductible, and the amount of income.
  12. Signatures: Sign the form and mention your capacity when signing on behalf of a HUF or AOP.

It is crucial to note that if your income has to be clubbed with the income of another person, Form 15G is not valid. For example, if the interest income from an FD is for a non-earning spouse or child, it has to be clubbed with the income of the depositor, and Form 15G cannot be used in this case. The PAN of the depositor is mandatory, and TDS should be deducted in the name of the depositor.

You can download Form 15G and Form 15H from the official income tax department website.

 

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The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

Frequently Asked Questions

Form 15G is a self-declaration form submitted by individuals who are below the age of 60 to their financial institutions to prevent the deduction of TDS on interest income.
 

Individuals below the age of 60 years whose total income is below the taxable limit can submit Form 15G.
 

Form 15H serves the same purpose as Form 15G but is specifically for senior citizens aged 60 years or above.
 

By submitting these forms, individuals declare that their total income is below the taxable limit, and hence, no TDS should be deducted on the interest earned on their investments.
 

Incorrect submission of these forms or providing false information can lead to penalties and legal consequences.
 

Yes, individuals must meet specific eligibility criteria, such as having income below the taxable limit, to submit these forms.
 

These forms need to be submitted annually or whenever there is a new deposit made in the financial institution if the individual wants to continue availing the benefits.
 

No, these forms are applicable only for certain types of interest income, such as interest earned on fixed deposits, recurring deposits, or savings accounts.
 

These forms should be submitted before the beginning of the financial year in which the income is earned.
 

If the income exceeds the threshold during the financial year, individuals should inform the financial institution immediately to avoid any discrepancies or penalties.

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