Form 15g And 15h To Save Tds On Interest Income

Form 15G & 15H to Save TDS on Interest Income

These forms are submitted to banks to avoid TDS deduction on interest income, given the total taxable income falls below the limit set by the IT Act.

Written by : Shipra Chaudhary

Reviewed by : Lalit Lata

Lalit Lata

2020-10-07

11622 Views

14 minutes read

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The interest you receive from bank accounts and deposits is fully taxable. Thus, the bank is supposed to deduct TDS (Tax deducted at source) from it every year if your interest exceeds ₹40,000. The limit is ₹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., ₹2.5 lakhs?

In such a case, you can submit Form 15G and Form 15H to avoid a TDS on interest income. You are on the right page if you are wondering what Form 15G and 15H are. This blog will provide you with the details regarding this. 

Table of Content

Form 15G Meaning ?

What is Form 15G? It is a declaration form that fixed deposit holders can fill out to ensure no TDS is deducted from their interest income for the fiscal year. Form 15G is available under Section 197A of the Income Tax Act of 1961. It allows you to declare your annual income to the bank and request them to stop deducting TDS on interest income.

Important Features of Form 15G:
 

  • You can submit Form 15G as an individual taxpayer whose age is below 60 years, a HUF, and a Trust
  • You should submit Form 15G before the payment of any interest by the bank
  • You 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 the 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 ₹2.5 lakhs.

What is Form 15H?

Form 15H is a self-declaration form that can be submitted by senior citizens aged 60 years or above to avoid TDS liability on interest earned from investments in fixed deposits (FD) and recurring deposits (RD). Form 15H is a part of Section 197A, Subsection 1C of the Income Tax Act, 1961. This declaration allows you to receive full interest on your deposits without any tax deductions.

Important Features of Form 15H:
 

  • You can submit Form 15H if you have attained the age of 60
  • Your taxable income for the financial year should be up to the maximum exempt amount, i.e., ₹3 lakhs and ₹5 lakhs if you are above 80 years
  • You need to submit the form at every bank branch you have a deposit
  • Ideally, you should submit the form with the deposits, as it will help you avoid waiting for ITR processing to get your money back
  • Form 15H is necessary for:

    • The bank deposit where your interest will exceed ₹10,000 for the financial year
    • If you have invested in bonds and debentures and the interest from these instruments exceeds ₹5000 in the financial year.

Illustration on Who Can Submit Form 15G and Form 15H

Here is an example of Form 15G and Form 15H eligibility in different income and age scenarios:

AgeMr Shekhar, Aged 30 yearsMr Grover, Aged 50 yearsMr Vyas, Aged 62 yearsMr Chopra, Aged 81 years
SalaryRs. 120,000Rs. 120,000--
Pension--Rs 120,000Rs 200,000
FD interest incomeRs. 105,000Rs. 260,000Rs 280,000Rs. 330,000
Total income before Section 80 deductionsRs. 2,25,000Rs. 710,000Rs 400,000Rs. 530,000
Deductions under Section 80Rs. 24,000Rs. 130,000Rs 100,000Rs. 55,000
Taxable incomeRs. 2,01,000Rs. 5,80,000Rs 300,000Rs. 475,000
Minimum exempt incomeRs. 2,50,000Rs. 2,50,000Rs 300,000Rs. 500,000
AgeBelow 60Below 60Above 60 Above 60
Tax on total income is NilYesNoYesNo
Interest income is less than the basic exemption limitYesNoN.A.N.A.
Eligibility for Form 15G/15HForm 15GNot EligibleForm 15HForm 15H


Key takeaways from the illustration:

  • Mr Shekhar, at the age of 30 has a total taxable income of less than ₹2.5 lakh and is eligible for Form 15G.
  • At age 50, the total interest income of Mr. Grover exceeds the maximum tax-exempt income limit of ₹2.5 lakhs for the age. This criteria alone disqualifies you from using Form 15G.
  • At 62, even though the interest income of Mr. Vyas exceeds ₹2.5 lakhs, you are eligible to use Form 15H. This is because the interest income remains below the maximum exempt income of ₹3 lakhs for the age.
  • Similarly, at the age of 81, the maximum exempt income is ₹5 lakhs. Thus, if your interest income does not exceed ₹5 lakh, you will be eligible for using Form 15H. However, your total taxable income should also remain below this limit.

When to Submit Form 15G & Form 15H?

You should ideally submit your Form 15G or Form 15H at the beginning of the financial year, provided your expected income in the financial year will not exceed the maximum tax-exempt amount. This will help you avoid any TDS on interest for the financial year.

Did you know?

Under the COVID-19 relaxation, the government of India had given a relief of one quarter for submitting Form 15G & 15H in the Financial Year 2020-21.

Claim Settlement Ratio

Difference Between Form 15G and Form 15H

The differences between Form 15G & 15H can be classified as given below:
 

 Form 15GForm 15H
Who can file?Resident Indians below 60 years of age
Hindu Undivided Family (HUF)
Trusts		Resident Indians aged 60 years or above
When to submit?Total taxable income is below Rs 2.5 lakhs
Or interest received, which is the only income for the financial year.
[&] Interest payment is below Rs 2.5 lakhs		Total taxable income is below Rs 3 lakhs (5 lakhs for 80 years and above)
Or interest received, which is the only income for the financial year.
[&] Interest payment is below Rs 3 lakhs
Why submit?Save TDS on interest paymentsSave TDS on interest payments
Where to submit?Banks
EPFO
with a Lessee who is a Corporate or AOP
Bond issuer		Banks
Post-Office
EPFO
with a Lessee who is a Corporate or AOP
Bond issuer
ValidityValid for one financial year
Except for FY 2020-21 when the validity was extended till 30th June 2021		Valid for one financial year
Except for FY 2020-21 when the validity was extended till 30th June 2021
Where to get the forms?Banks, Post Offices, Insurers, Income Tax websiteBanks, Post Offices, Insurers, Income Tax website
Compulsory documentPANPAN

What are the Different Parts of Form 15G?

Form 15G typically consists of 2 parts:

  • Part 1: It consists of multiple fields where you need to add personal details like name, address, contact details, PAN, annual income, financial year details, the total number of Form 15G applicable for FY, aggregated income, place, date, and signature of the applicant. These details need to be filled out by individuals making claims on TDS on interest income.
  • Part 2: It’s of the form includes information regarding the individual or entity responsible for disbursing income to the declarant, such as banks or tenants. Required details comprise the TAN (Tax Deduction and Collection Account Number), name, full address, amount of income, tax paid, and date of payment.

What are the Different Parts of Form 15G? 

Form 15G typically consists of 2 parts:

  • Part 1: It consists of multiple fields where you need to add personal details like name, address, contact details, PAN, annual income, financial year details, the total number of Form 15G applicable for FY, aggregated income, place, date, and signature of the applicant. These details need to be filled out by individuals making claims on TDS on interest income.

  • Part 2: It’s of the form includes information regarding the individual or entity responsible for disbursing income to the declarant, such as banks or tenants. Required details comprise the TAN (Tax Deduction and Collection Account Number), name, full address, amount of income, tax paid, and date of payment.

What to do if you Forget to Submit Form 15G & Form 15H?

Submitting Form 15G & 15H is an annual activity. So, it’s easy to forget. If you have had the bank deduct TDS due to this delay in submission, you should not worry. Use the following routes to minimise the TDS flow and recover the amounts:

  • Submit Form 15G & 15H Immediately: The first thing to do is to submit Form 15G & 15H as soon as possible. This will avoid any further deductions. Also, you will usually have up to 90 days after the new financial year begins to submit the form. If you missed this timeline, submit it within the next quarter. Banks credit interests usually every quarter. So, you can still save TDS on future interest payments.
  • File Your Income Tax Return: When you file ITR you can give an accurate estimate of your taxable income and rebates. The TDS deductions in the previous year appear in your Form 26AS. This amount should also include any TDS deducted by banks on the interest paid to you. This amount will be adjusted against your total tax liability for the financial year. If you have been eligible for Form 15G or 15H, your tax liability will be nil. Thus, the amount of TDS on interest income (as appearing on Form 26AS) must be returned to you.

How to Fill Form 15G Online?

Some banks and financial institutions may allow you to fill Form 15G and 15H online. You can submit the following details to complete your declaration:

  • Name & PAN (compulsory)
  • Tax status – Individual, HUF or Trust
  • Previous year (for which you are submitting the Form)
  • Residential status in the previous year
  • Residential address and contact details (Mobile, e-mail)
  • Option A – Select ‘Yes’ if your taxable income was more than the maximum exempt limit in the past six years
  • Mention the latest year when your taxable income exceeded the maximum exempt limit
  • Estimated income for which the declaration is made – Estimated income of the current  previous year
  • Estimated total income of the P.Y. – This is the income of the current PY that you have already received
  • Details of other Form 15G (or 15H) filed in the P.Y. – Enter the number of forms filed during the previous year and the aggregate income amount for those years
  • Details of income for which declaration is filed – Provide the income sources, nature, Income Tax Section, and amounts of income

Other Ways to File Form 15H & 15G

You can submit Form 15G & Form 15H to avoid TDS on interest income by the bank. However, banks are not the only places you can use Form 15G & 15H. The following payments also face TDS deductions, and you can use Forms 15G and 15H to avoid TDS:

  • TDS on EPF Withdrawals: If you wish to withdraw your EPF balance before completing five years of service, a TDS may be applied to the amount. EPFO will deduct TDS on the withdrawal amount if it exceeds ₹50,000, and for that, you can submit Form 15G or 15H. The TDS rate is 10% for such withdrawal if you have provided PAN. If not, the rate goes to 34.606%.
  • TDS on Corporate Bond Interest Payments: If your interest income from the corporate bond investment exceeds ₹5000 in a financial year TDS will apply to the amount. However, you can submit  Form 15G & 15H to avoid this.
  • TDS on Post Office Deposits: The post office will apply TDS to the interest payment under the Senior Citizen Savings Scheme if the amount exceeds ₹50,000. You can submit Form 15H to avoid the TDS.
  • TDS on Rental Income: If you are receiving rent on a property from a firm or association of persons, TDS may apply to the receipts. The lessee (party paying the rent) should deduct TDS at 10% on the rental payments if it exceeds ₹2.4 lakhs in a financial year. You can submit Form 15G or Form 15H to avoid TDS if rentals are your only income in the financial year.
  • TDS on Insurance Commission: Tax Deducted at Source applies to insurance commissions exceeding ₹15,000 annually. If their total income tax liability is nil, insurance agents can submit Form 15G or Form 15H to prevent TDS deduction.
  • TDS on Dividends: Similarly, TDS is applicable on dividend income exceeding ₹5,000. Individuals can submit Form 15G or Form 15H to either reduce or exempt TDS on dividends.

Conclusion

Form 15H and 15G serve as indispensable tools for managing TDS on interest income. It is essential, however, to adhere strictly to the primary requirement of these forms: that the individual's tax liability remains zero to avoid any potential tax evasion issues. Rather than resorting to fraudulent practices to evade taxes, individuals can explore legitimate avenues such as investing in financial instruments. 

Under Section 80C of the Income Tax Act of 1961, investments in options like insurance, Fixed Deposits (FDs), and Employees' Provident Fund (EPF) offer opportunities to reduce tax liabilities and foster financial growth legally.

Glossary

  • Tax Exemption: This refers to the portion of income that is not subject to taxation, often provided for specific types of income or under certain conditions to encourage savings or investments.
  • Tax Liability: It represents the total amount of tax an individual or entity owes to the government based on their taxable income after deductions and credits have been applied.
  • EPF: Employees' Provident Fund is a mandatory retirement savings scheme in India where both employees and employers contribute a fixed percentage of the employee's salary.
  • Tax Evasion: It involves illegal actions to reduce tax liabilities, such as underreporting income, overstating deductions
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FAQs on Form 15G and Form 15H

As an NRI, you cannot submit Form 15G  & Form 15H for TDS deductions. These Forms are only available to resident Indians. Also, a TDS deduction is compulsory for income payments to NRIs.

 

No, filing Form 15G and 15H only means that your estimated total taxable income for the previous year will be less than the maximum exempt limit. However, if your total taxable income exceeds this limit, you must pay tax on it. This will include the taxable part of interest income, i.e., interest received over the exempt limit of ₹10,000.

Yes, you should submit Form 15G or 15H at all bank branches where you have a deposit. You can also submit Form 15H to the Post-Office branch where you have a Senior Citizen Savings Scheme Account (SCSS). The interest exceeding ₹50,000 per year from SCSS will attract TDS on interest income.

If you have submitted Form 15G or 15H and end up with a taxable income, you will need to pay tax on your total income at the end of the financial year. This tax liability will also include the tax on interest income. Also, you need to pay at least 100% of your total advance tax liability before the 15th of March. TDS deductions help you meet this requirement effortlessly. So, ensure that you submit Form 15G or 15H only if you are confident about receiving incomes totalling less than or close to the maximum exempt limit.

No, the income tax department does not need Form 15G or 15 H. You can simply file your ITR and declare your taxable incomes there.

No, Forms 15G and 15H are not alternatives to your annual ITR. These forms are mere declarations for the convenience of taxpayers with low incomes. You will still need to file your ITR to complete your tax assessment and claim any refunds on tax paid.

You will need Form 15G while withdrawing from your EPF balance if you fall into the following category:

  • You are withdrawing from EPF before completing five years of continuous service
  • Your withdrawal amount is more than ₹50,000