Forms 15G and 15H : How to save TDS on Interest Income

Forms 15G and 15H : How to save TDS on Interest Income 

First quarter of the financial year has already started and  it is important, for all the people who want to receive interest income without deduction of tax, to submit form 15G and 15H immediately to the banks. Individual investors shares Form 15G and 15H with Banks to avoid tax deduction at tax. However, one should take due care while submitting these forms.

What can you do to make sure bank does not deduct TDS on interest:

What can you do to make sure bank does not deduct TDS on interest, if your total income is not taxable? Banks have to deduct TDS when interest on fixed deposits as well recurring deposits taken together exceeds Rs. 10,000 in a financial year, for all the branches of the bank taken together, for the bank with core banking. Otherwise the threshold of Rs. 10,000 is to be calculated for each branch. Please note while determining the threshold of Rs. 10,000 interest on your saving bank account shall not be taken into account.

There is an confusion in the minds of people that fixed deposit with tenure of more than one year, the tax is deducted only at the time of maturity of the FD, i.e. at the time of payment of the interest. This is not so. The bank calculates proportionate interest for the period ended on 31st March and will deduct tax, in case interest is more than 10,000 for a year.

But if your total income is below the taxable limit, you can submit Forms 15G and 15H to the bank requesting them not to deduct any TDS on your interest.

What is Form 15G and Form 15H?

Form 15G and Form 15H are forms you can submit to make sure TDS on your interest income is not deducted if you meet the conditions. Also, you must have a PAN before applying for these forms. Some banks allow these forms to be submitted online through the bank’s website. Form 15H is for senior citizens, those who are 60 years or older; while Form 15G is for everybody else.

Form 15H :- Declaration under sub-section (1C) of section 197A of the Income-tax Act, 1961, to be made by an individual who is of the age of sixty-five years or more (Sixty Years from 1st July, 2012) claiming certain receipts without deduction of tax.

Form 15G:- Declaration under sub-sections (1) and (1A) of section 197A of the Income-tax Act, 1961, to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax of tax.

Who can submit form 15G?

  1. You are an individual or HUF
  2. You must be a Resident Indian
  3. You should be less than 60 years old
  4. Tax calculated on your Total Income is nil
  5. The total interest income for the year is less than the minimum exemption limit of that year, which is Rs 2,50,000 for financial year 2017-18.

Who can submit form 15H?

  1. You are an individual
  2. You must be a Resident Indian
  3. You are 60 years old or will be 60 years old during the year for which you are submitting the form
  4. Tax calculated on your Total Income is nil

Examples : Who can submit Form 15G and Form 15H

Income of Shobha Ravi Shikha Keshav
Age 52 years 25 years 67 years 70 years
Salary Rs. 1,90,000
Pension Rs. 1,00,000
Fixed Deposit interest income Rs. 85,000 Rs. 2,60,000 Rs. 1,80,000 Rs. 3,30,000
Total Income before allowing section 80 Deductions Rs. 2,75,000 Rs. 2,60,000 Rs. 2,80,000 Rs. 3,30,000
Deductions under section 80 Rs. 45,000 Rs. 30,000 Rs. 10,000 Rs. 55,000
Taxable income Rs. 2,30,000 Rs. 2,30,000 Rs. 2,70,000 Rs. 2,75,000
Minimum exempt income Rs. 2,50,000 Rs. 2,50,000 Rs. 3,00,000 Rs. 3,00,000
Eligible to submit Form 15G Yes No No No
Eligible to submit Form 15H No No Yes Yes
Explanation Form 15G can be submitted as age is less than 60 years. Total tax is nil and interest income is less than minimum exempt income. Form 15G cannot be submitted since interest income is more than minimum exempt income. Form 15H can be submitted if age is more than 60 years and tax calculated on total income is nil. Form 15H can be submitted as age is more than 60 years and tax calculated on total income is nil. Form 15H can be submitted although interest income exceeds inimum exemption limit.

 

Purposes for which Form 15G/Form 15H can be submitted

While these forms can be submitted to banks to make sure TDS is not deducted on interest, there a few other places too where you can submit them.

  • TDS on income from corporate bonds – If you hold corporate bonds, TDS is deducted on them if your income from them exceeds Rs 5,000. You can submit Form 15G/Form15H to the issuer requesting non-deduction of TDS.
  • TDS on EPF withdrawal – TDS is deducted on EPF balances if withdrawn before 5 years of continuous service. If you have had less than 5 years of service and plan to withdraw your EPF balance of more than Rs 50,000 (Rs 50,000 effective 1 st June 2016, Rs 30,000 prior to that), you can submit Form 15G/Form15H. However, you must fulfil conditions (listed above) to apply for these forms, i.e. tax on your total income including EPF balance withdrawn should be nil.
  • TDS on post office deposits – Post offices which are digitised also deduct TDS and accept Form 15G/Form15H if you meet the conditions applicable for submitting them.
  • TDS on rent – TDS is deducted on rent if total rental payment in a year exceed Rs 1.8lakhs. If tax on your total income is nil, you can submit Form 15G/Form15H to request the tenant to not deduct TDS.(applicable from 1 st June 2016)
  • TDS on Insurance Commission – TDS is deducted on insurance commission if it exceeds Rs 15000 per financial year. But with effect from 01.06.2017 insurance agents  can submit Form 15G/form 15H  for non deduction of TDS if tax on their total income is nil.

What can you do if the bank has already deducted tax before you submit the form?

A lot of taxpayers forget to submit Form 15G and Form 15H timely. In such a situation TDS may already be deducted by the bank.

What should one do about extra TDS deducted –

    • File your income tax return to claim refund of TDS – The only way to seek a refund of excess TDS deducted is by filing your income tax return. Banks or other deductors cannot refund TDS to you, since they have already deposited it to the income tax department. Income tax department will refund excess TDS, after you file an income tax return.
  • Submit Form 15G and Form 15H immediately – TDS is usually deducted quarterly. If you forgot to submit Form 15G/Form 15H, don’t worry. Submit it at the earliest available opportunity, so that no TDS is deducted for the remaining financial year.

To claim refund of excess TDS deducted, start filing your return.

So to conclude please file your form 15 G or 15H only if you are eligible to file the same and have it filed before the bank actually deducts any tax on it and mention your PAN correctly.

 

FAQ’s on 15G and 15H Asked:

Can HUF submit Form 15G/Form15H?

HUF can submit Form 15G if it meets the conditions but Form 15H is only for individuals.

Can NRIs submit Form 15G/Form 15H?

NRIs cannot submit Form 15G or Form 15H, these can only be submitted by resident Indians.

Do I need to submit Form 15G/Form15H at all the branches of the bank?

Yes, you must submit at each branch of the bank from which you will receive interest income. Although, TDS is deducted when total interest earned from all branches exceeds Rs 10,000 in total.

Does filing Form 15G/Form15H mean my interest income is not taxable?

Form15G/Form15H is only a declaration that no TDS should be deducted on your interest income since tax on your total income is nil. Interest income from fixed deposits, recurring deposits, and corporate bonds is always taxable.

Will my interest income become tax free if I submit Form 15G/Form15H?

Interest income from fixed deposits and recurring deposits is taxable. You should submit this form only if tax on your total income is zero (and you meet other conditions listed above).

I submitted Form 15G and Form 15H but I have taxable income?

You must intimate to your bank that tax on your total income is not zero. The bank will make changes and deduct TDS. You should report the entire interest income in your tax return and pay tax on it as applicable.

Do I have to submit this form to the income tax department?

These forms don’t have to be submitted to the income tax department by you. When you submit them to the deductor, he/she will prepare and submit to the income tax department, a detail of all such forms received.

Download Form 15H in PDF

Download Form 15G in PDF








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