The interest you receive from bank accounts and deposits is fully taxable. Thus, the bank is supposed to deduct TDS from it every year if your interest exceeds Rs 40,000. The limit is Rs 50,000 for senior citizens. But what if your total taxable income in a financial year is less than the maximum tax-exempt limit; i.e. Rs 2.5 lakhs? You can submit Forms 15G and 15H to avoid TDS deduction on your interest income in such a case.
What is Form 15H?
Form 15H is a declaration under sub-section (1C) of section 197A of the Income Tax Act to be made by an individual of the age of 60 years or more to claim certain receipts without deduction of tax.
Important features of Form 15G:
- You can submit Form 15G as an individual taxpayer whose age is below 60 years, an HUF and a Trust.
- You should submit Form 15G before the payment of any interest by the bank.
- You will need to submit the form to all the branches and banks where you have an interest-bearing deposit.
- The eligibility for the Form comes into picture when your taxable income does not lead to a tax liability for the financial year.
- The facility is only available to resident Indians.
- The total interest income you will receive in the financial year should be less than the minimum taxable income of Rs 2.5 lakhs.
- The estimated tax for the previous year should be zero. The individual should not have paid tax in the previous year because his/her income should be below the taxable amount.
- Need to be submitted to the banks if the interest from one branch exceeds Rs.10,000 a year.
- It will require to be submitted if the interest income from any source other than a deposit, such as, interest on a loan, advance, debentures, bonds, etc. exceeds Rs.5,000 annually.
Eligibility Criteria to Submit this Form has been Listed Below
- Form 15G can be submitted by individuals below the age of 60 years or by a Hindu Undivided Family (HUF).
- It should be submitted before the first payment of interest on a fixed deposit.
- The individual should submit this form to all deductors to whom a loan was advanced, i.e., this form will need to be submitted to each bank branch through which the individual is collecting interest.
- This form can only be submitted by individuals whose tax payable on their total income is zero.
- The total interest income is less than the minimum exemption amount for that year. The minimum exemption amount for the financial year 2022-23 (AY 2023-24) is Rs.2,50,000.
The validity of Form 15H and 15G are one year. The forms must be submitted at the start of every financial year.
In case the forms are not submitted, the TDS may have been deducted by the bank. In such cases, you can file the forms immediately or file the ITR to get the TDS refunded.
Places where Form 15H and 15G can be Submitted – Apart from Banks
Apart from banks, some of the places where Form 15H and 15G can be submitted are mentioned below:
- Insurance Commission
- Rent
- Post Office Deposits
- LIC Premium Receipts
- Income from Corporate Bonds
- EPF Withdrawal
Purposes for Submitting Form 15G/15H
Form 15G and Form 15H are usually submitted to banks to prevent the deduction of TDS on interest, these forms can also be submitted for a few other reasons:
TDS for EPF withdrawal
- There is a deduction of TDS on EPF if an individual withdraws their EPF before completion of 5 years of continuous service. If an individual has an EPF balance of more the Rs.50,000 and wishes to withdraw it before completion of 5 years of continuous service, he/she may submit a Form 15G/15H.
TDS on Income Generated from Corporate Bonds
- An individual is eligible for a deduction of TDS from corporate bonds if the income generated from them exceeds Rs.5,000.
TDS on Income from Post Office Deposits
- Digitized post offices also conduct TDS and will accept Form 15G/15H if the individual meet the eligibility criteria.
TDS on Rent
- There is a deduction of TDS on rent if the total rental payment for a year exceeds Rs.1.8 lakhs. If the individual’s total income is nil, he/she can submit Form 15G/15H to request the tenant to not deduct TDS.
Things to be taken care off while Submitting Form 15G/15H
- An individual can only submit Form 15G/15H to a bank with a valid PAN, failing which, tax will be deducted @ 20%. It is advisable to submit a copy of the PAN card with the cover letter.
- The individual should make sure he/she receives an acknowledgment while submitting Form 15G/15H. Acknowledgment of submission of PAN details are useful if a dispute with the bank arises.
- As per the revised form, the individual will need to submit the details of the Form 15G/15H submitted by him/her to other banks as well as the interest income amount mentioned in these forms.
- As the individual has submitted his/her PAN, the respective assessing officer will have access to all the information submitted by the individual to other banks and will be able to detect any incorrect information submitted by the individual.
- Indian law has a provision for imprisonment for a minimum of three months if an individual is found to have provided incorrect information in these declaration forms.
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