Form 15G and Form 15H: Form 15G is a declaration filed by the bank on behalf of fixed deposit holders who are less than 60 years of age. According to income tax rules, it is mandatory for banks to deduct TDS when the amount of interest for recurring deposit and fixed deposit is more than ₹10,000 in a financial year. The TDS limit has been increased to ₹40,000 from the financial year 2019-2020. The person also needs to furnish PAN while filing Form 15G. If Form 15G is not submitted initially, TDS deducted needs to be claimed while filing an Income Tax return.
Form 15H is a declaration by individuals aged 65 years or more to claim relief from TDS deductions for income from interest. It is to be submitted to the bank before the first interest is credited. It should be submitted when the amount of interest from one branch exceeds ₹10,000.
- Introduction To Form 15G And 15H
- Basic Differences Between Form 15G And 15H
- Example To Understand Who Can Submit Form 15G And Form 15H
- Validity Of Form 15G And 15H
- Steps To Be Taken If TDS Had Already Been Deducted
- How To Submit Form 15G And 15H Online?
- Penalty For Filing Form 15G And 15H
Introduction To Form 15G And Form 15H
According to Section 194A, TDS is deducted at the rate of 10% from income on interest from fixed deposit, recurring deposit etc., other than interest on securities. Failure to furnish PAN will attract a 20% tax rate. Therefore, banks deduct TDS at the rate of 10% on income from interest if the amount exceeds ₹10,000 in a financial year.
For assesses who are not liable for TDS deduction as their interest income is within the limit, Form 15G and 15H are introduced u/s 197A and Rule 29C.
For TDS on EPF withdrawal, post office deposits, income from corporate bonds and insurance commission, Form 15G or 15H can be filed under section 194D. For TDS on rent Form, 15G or 15H can also be filed from the financial year 2016-17.
Basic Differences Between Form 15G And Form 15H
Form 15G
- It can be submitted by a resident individual, HUF or trust.
- It can be submitted by an individual whose age is less than 60 years.
- It can be submitted while tax on estimated income for the current year is nil.
- It can be submitted only when the interest amount and other income from all sources do not exceed the basic exemption limit of ₹250,000 for the financial year.
Form 15H
- It can be submitted only by a resident individual and not by HUF, who is above the age of 60 years or completes the age of 60 years during the financial year.
- It can be submitted while tax on estimated income for the current year is nil.
- It can be submitted even when total income from all sources exceeds the basic exemption limit of ₹300,000 for senior citizens and ₹500,000 for super senior citizens for the financial year.
Example To Understand Who Can Submit Form 15G And Form 15H
| Income Of | A | B | C | D |
| Age | 20 | 25 | 65 | 68 |
| Salary | 170,000 | 90,000 | 180,000 | 0 |
| Fixed Deposit Interest Income | 60,000 | 270,000 | 70,000 | 340,000 |
| Total Income before deductions | 230,000 | 360,000 | 250,000 | 340,000 |
| Section 80C deductions | 0 | 120,000 | 0 | 100,000 |
| Taxable Income | 230,000 | 240,000 | 250,000 | 240,000 |
| Minimum Exempt Income | 250,000 | 250,000 | 300,000 | 300,000 |
| Eligible to submit Form 15G | Yes | No | Yes | Yes |
| Eligible to submit Form 15H | No | No | Yes | Yes |
| Explanation | A can submit Form 15G as the taxable amount and income from all sources are below the exemption limit of ₹250,000 | B cannot submit Form 15G as the income earned from interest is more than the exemption limit of ₹250,000 | C can submit Form 15H as the tax calculated on total income is nil and the age is more than 60 years. | D can submit Form 15H as the tax computed on total income is nil and the age is more than 60 years. The person can fill the form even if the amount of income earned from interest is more than the basic exemption limit. |
Validity Of Form 15G And 15H
Form 15G and 15H have a validity of one financial year and need to be submitted every year. If an individual submits these forms at the beginning of the financial year, then TDS will not be deducted bank on the income from interests.
Steps To Be Taken If TDS Had Already Been Deducted
If TDS has already been deducted before submitting the forms, an individual can claim such TDS while filing an income tax return. The deducted TDS will be provided in Form 16A through a TDS certificate. The interest earned on a fixed deposit is credited at the end of the year. The deducted TDS is to be claimed while filing the income tax return in the same year and cannot be carried forward.
How To Submit Form 15G And 15H Online?
There is no need to fill forms 15G and 15H manually. An individual can fill the forms online simply by logging in to his/her net banking account, then download the already pre-filled form, print it and submit the form to the bank after signature.
Penalty For Filing Form 15G And 15H
According to Section 277 of the Income Tax Act, a wrong or false declaration in form 15G or 15H will attract a penalty. The prosecution includes imprisonment, which can vary from three months to two years, along with a fine. The imprisonment term may be extended to seven years along with a fine if the tax evaded exceeds ₹25 lakh.
Cases When A Person Becomes Ineligible Afterwards
In such instances in which you meet all the criteria at the beginning of the year and submit form 15G or 15H. But afterward, you earn unexpected income and do not meet the specified criteria, then a 15G or 15H withdrawal application needs to be submitted. The bank will deduct TDS from the account on the next payment.
Other Points
- While submitting form 15G or 15H, an individual needs to submit PAN to the deductor or else the TDS to be deducted at the rate of 20%.
- Interest income is calculated on the basis of accrual and not on a due or payment basis.
- A written acknowledgement is to be taken while submitting such forms to avoid any inconveniences.
- A copy of such forms is to be submitted to the Commissioner of Income Tax on or before the 7th of next month by the payer of income.