How can form 15G/15H help in preventing or lowering TDS?
Published On: Jan 16, 2020 • Last Updated: Oct 14, 2023 • 6.1 min read •
Form 15G and Form 15H are submitted to prevent Financial Institutions from deducting TDS on the interest earned on a Fixed Deposit (FD) if the total interest income is not more than the allowed limit. Although Fixed Deposits maybe the secured form of investments, they are not protected from tax deductions at the source.
A fixed deposit will pay out the interest upon maturity If the interest earned through such fixed deposits crosses Rs. 40,000 (Prior to FY 2019-20, the said limit was Rs.10,000) for regular depositors and Rs.50,000 for senior citizens, the bank will deduct TDS. To avoid this, a depositor will have to file the 15G and 15H forms at the start of the financial year with the bank. With the simplification of this process in place, every investor can now file these forms electronically and avoid the issue that comes with filing forms physically.
Points to note on 15G and 15H
For regular depositors below 60 years of age
This is for senior citizens
Requirement to submit form 15G: If the total interest income earned from fixed deposits is less than the prescribed limit of Rs.40,000 in a given financial year, form 15G for fixed deposit will have to be submitted by the depositor
Requirement to submit form 15H: In case the total income earned is less than the provided limit of Rs.50,000 for senior citizens, in a particular fiscal year, form 15H will have to be submitted by the depositor.
1. What is Form 15G and Form 15H?
Basically Form 15G and Form 15H are forms you can submit to prevent TDS deduction on income earned if depositor meets the conditions mentioned below. For this, PAN is compulsory. A few banks allow you to submit these forms online through the bank’s website. Form 15H is basically for senior citizens, those who are 60 years or older; while Form 15G is for everybody else.
Form 15G and Form 15H for preventing TDS deduction are valid for one fiscal year. So, it is required to submit these forms every year at the beginning of the financial year. This will ensure the bank does not deduct any TDS on interest income earned.
2. Conditions to be fulfilled to submit Form 15G
Must be an individual or HUF or trust or any other assessee but not a company or a firm
Only Resident Indians can apply
A person should be less than 60 years old
Tax calculated on Total Income is nil
The total interest income for the year is less than the basic exemption limit of that year, which is Rs.2.5 lacs for the financial year 2019-20 (AY 2020-21)
3. Conditionsthat must be fulfilled to submit Form 15H
Must be an individual and resident Indian.
Must be a senior citizen or will be 60 during the year for which you are submitting the form.
Tax calculated on Total Income is nil.
4. Details Required
Banks also deduct TDS from FDs based on the documents submitted by the investor. Usually, any Fixed Deposit generating interest higher than RS 40,000 will have a 10% TDS deducted at the source, however, if the investor has not given the bank their PAN number, then the TDS deducted for Fixed Deposits generating more than RS 40,000 in interest will see a 20% deduction at the source. Hence it is essential that the investor provides the correct PAN number while filing TDS return forms. Along with the correct PAN number, investors will have to furnish other details such as email ID’s, telephone numbers, occupation, and complete addresses along with details of income from other sources. These could be other investments, dividends from Shares, mutual funds or any money withdrawn from National Savings Schemes.
5. Purposes for which Form 15G or Form 15H can be submitted
While these forms can be submitted to banks to make sure TDS is not deducted on interest earned, there are a few other requirements too where these forms need to be submitted.
TDS on EPF withdrawal –TDS is deducted on EPF balance if withdrawn before 5 years of continuous service employed. If any deposit holder has had less than 5 years of service and plans to withdraw its EPF balance of more than Rs.50,000 (Rs 50,000 effective 1 June 2016, Rs.30,000 prior to that), he/she can submit Form 15G or Form15H. However, it must fulfil conditions (listed above) to apply for these forms. It means the tax on the total income including EPF balance withdrawn should be NIL.
TDS on income from corporate bonds –If any deposit holder holds corporate bonds, TDS is deducted on them if income from them exceeds Rs 5,000. A depositor can submit Form 15G or Form 15H to the issuer requesting the non-deduction of TDS.
TDS on post office deposits –Post offices that are digitized also deduct TDS and allow Form 15G or Form 15H, if depositor meet the conditions applicable for submitting them.
TDS on rent – TDS is deducted on rent income exceeding Rs 2.4 lakh annually. If the tax on total income is nil, the deposit holder can submit Form 15G or Form 15H to request the tenant to not deduct TDS (applicable from 1 April 2019).
TDS on Insurance Commission – TDS is deducted on insurance commission too if it exceeds Rs 15000 per fiscal year. However, insurance agents can submit Form 15G/Form 15H for non-deduction of TDS if the tax on total income earned is nil (with effect from 1 June 2017).
6. Important Information for Deductors
If a person is a TDS deductor, the Income-tax Act requires him to allot a Unique Identification Number or UIN to everyone who submits a Form 15G/Form15H. It must require to file a statement of Form 15G/Form15H on a quarterly basis and must retain these forms for 7 years.
Difference between form 15G and 15H:-
1. Form 15G can be submitted by an individual below the age of 60 Years while form 15H can be submitted by senior citizens i.e. individuals above the age of 60 years.
2. Form 15G can be submitted by Hindu Undivided families but form 15H can be submitted only by individuals above the age of 60 years.
3. 15G can not be filed by any person whose income from interest on securities/interest other than “interest on securities”/units/amounts referred to in clause (a) of sub-section (2) of section 80CCA exceeds the maximum amount not chargeable to tax.
Conclusively we can say that any person whose tax on estimated income earned is not NIL and having income from interest on securities/interest other than “interest on securities”/units/amounts referred to sub-section (2) of section 80CCA exceeds maximum amount not chargeable to tax can not file DECLARATION u/s 15G.
However, if you are eligible and also fulfill the conditions, the payer can not deduct the tax even if it is above Rs.40,000
Not required to submit the form if such income has to be clubbed with the income of another person
It is not required to submit Form 15G if income has to clubbed with someone else. Interest income from an FD for a non-earning spouse or a child has to be clubbed with the income of the deposit holder. In such a case Form 15G is not valid/Null. PAN of the deposit holder is mandatory and TDS should be deducted in the name of the depositor.
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About the Author
CS Shubham Katyal
CS Shubham Katyal is an Associate Member of The Institute of Companies Secretaries of India and a commerce graduate having good experience in secretarial and legal matters. He is a Speaker and Visiting Faculty Member at The Institute of Companies Secretaries of India and Former Committee member of Young Member Empowerment & Placement Committee NIRC-ICSI(2019-20). He has authored several articles on complex subjects which featured on various professional forums.