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Form 15G and Form 15H are submitted to prevent banks from deducting TDS on the interest earned on a Fixed Deposit (FD) if the total interest income is not more than the prescribed limit. Although Fixed Deposits maybe the safest form of investments, they are not immune from tax deductions at the source. Basically a fixed deposit will pay out the interest upon maturity and if the interest earned through such fixed deposits crosses Rs. 10,000 for regular deposit holders and Rs.50,000 for senior citizens, the bank will deduct TDS. To avoid this, a depositor will have to file the 15G & 15H forms at the start of the fiscal year with the bank itself. With the simplification of this process in place, investors can now file these forms electronically and avoid the hassles that come with filing forms physically.
|Points to note on 15G and 15H|
|15G||For regular deposit holder below 60 years of age|
|15H||This is for senior citizens|
When to submit form 15G: If the total interest income earned from fixed deposits is less than the prescribed limit of Rs.10,000 in a given financial year, form 15G for fixed deposit will have to be submitted.
When to submit form 15H: In case the total income earned is less than the given limit of Rs.50,000 for senior citizens, in a particular financial year, form 15H will have to be submitted.
Let us now take an example and understand how to fill and submit form 15G & 15H in SBI:
Now let us understand how to fill form 15G & 15H for fixed deposits:
Banks also deduct TDS from fixed deposits based on the documents submitted by the investor. Usually any FD generating interest higher than RS 10,000 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 FD’s generating more than RS 10,000 in interest will see a 20% deduction at the source. Hence it is imperative that the investor provides the correct PAN number while filing these forms. Along with the correct PAN number, investors will have to furnish other details such as telephone numbers, email ID’s, 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 These could be other investments, dividends from Shares, mutual funds or any money withdrawn from National Savings Schemes.
Duplicate copies of the declaration will have to be submitted to the banks. While some banks require only two copies, other banks will take three and provide one copy to the investor as an acknowledgement. It is the duty of the investor to verify the information furnished in the declarations before signing it. Investors making false statements will be liable for prosecution under the aegis of Section 277 of the Income Tax act of 1961.
Banks deduct TDS on only those deposits that generate interest higher than the prescribed limit. In any case of banks deducting TDS for such deposits even after the investor has submitted the required forms 15G and 15H, then they can file income-tax returns at the end of the financial year and can claim a refund.