Form 15G, Form 15H to Save TDS on Interest Income
Recurring Deposits (RDs) are a secure savings option offered by banks and financial institutions. Many RD holders want to avoid TDS on interest, especially when their income is below the taxable limit. This is where Form 15G and Form 15H become relevant.
Form 15G and 15H are self-declaration forms that are submitted with the primary purpose of preventing deduction of TDS - Tax Deducted at Source, on certain types of income. It can be income from pension, rent, insurance commission, or deposits received through national saving schemes. Read on for a detailed explanation about all the features of these forms, differences between them and other related details.
What are Form 15G and 15H?
Eligible Indian residents fill out these self-declaration forms and submit iit to payers like banks for preventing tax deduction. Both these forms must be submitted annually by the individual, ideally at the beginning of the year.
Form 15G:
- Form 15G is a self-declaration form submitted by Indian residents who are below 60 years of age, Hindu Undivided Families (HUFs), and certain trusts (not applicable for any firm or company).
- Its purpose is to declare that the total tax liability on the individual's estimated income for the financial year is below the basic exemption limit resulting in nil tax liability.
- It is most commonly used to avoid TDS on interest income from Fixed Deposits, Recurring Deposits, and sometimes on withdrawals from an Employee Provident Fund (EPF)
Form 15H
- Form 15H is a similar self-declaration form, but it is exclusively for Indian residents who are 60 years of age or above (Senior Citizens).
- Like Form 15G, its main purpose is to assure the payer (e.g., a bank) that the senior citizen's overall tax liability for the year is zero.
- Senior citizens are eligible for a higher basic exemption limit, and this form helps them prevent unnecessary TDS on their interest income.
- While the tax liability must still be nil, there is no restriction that the aggregate income for which the form is filed must be below the basic exemption limit, making it easier for senior citizens to file.
Key Differences between Form 15G vs Form 15H
The key differences between form 15G and Form 15H are as given below:
Features | Form 15G | Form 15H |
Eligibility (Age) | For individuals below 60 years of age. | For individuals 60 years or above (Senior Citizens). |
Other Eligible Entities | Can be submitted by Hindu Undivided Families (HUFs) and Trusts. | Cannot be submitted by HUFs or Trusts. Only for resident individuals. |
Tax Liability Condition | Tax on estimated total income for the year must be nil. | Tax on estimated total income for the year must be nil. |
Interest Income Condition | The total interest of income (or other specified income) must not exceed the basic exemption limit (e.g., Rs.2,50,000 in the old regime). | There is no such restriction on the total interest income, as long as the net tax liability remains nil (due to the higher exemption limit). |
Applicable Section | Section 197A (1A) & (1B) of the Income Tax Act, 1961. | Section 197A (1C) of the Income Tax Act, 1961. |
TDS Sections Where Form 15G/15H Can Be Used
Form 15G and Form 15H are self-declaration forms primarily covered under Section 197A of the Income Tax Act, 1961. This section allows a person to receive certain types of income without the deduction of TDS, provided their total tax liability for the year is nil. The sections for which the forms can be used to request non-deduction of TDS on income covered are as given below:
TDS Section | Nature of Income | Payer/Deductor |
Section 194A | Interest (Other than Interest on Securities) | Banks, Co-operative Societies, Post Offices, etc. |
Section 192A | Payment of accumulated balance of EPF | Employees' Provident Fund Organisation (EPFO) / Employer |
Section 194 | Dividends | Companies |
Section 194EE | Payments in respect of National Savings Scheme | Post Office / NSS Scheme Authority |
Section 194K | Income from Mutual Fund Units | Mutual Fund House |
Section 194LBA | Income from Units of Business Trust | Business Trust (e.g., REIT, InvIT) |
Section 194DA | Maturity Proceeds of Life Insurance Policy | Insurance Company |
Section 194-I | Rent | Tenant (when a threshold is met) |
Section 194H | Commission or Brokerage | Payer of Commission |
When and Where to Submit Form 15G/15H?
The Form 15G and Form 15H should ideally be submitted at the beginning of every financial year (on or after April 1st) to avoid TDS deductions on eligible incomes.
This form is submitted for the following purposes:
- At the bank for interest related purposes.
- At EPFO for early withdrawal of provident funds.
- At LIC as the policy maturity proceeds.
Consequences of Submitting False Form 15G/15H:
If you are submitting a Form15/15H even if your income is taxable, then your Form 15G/15H will be treated as false. In such a case, you may face imprisonment of 6 months up to 7 years and a fine, if the tax evasion is more than Rs.25,000 and imprisonment of 3 months to 2 years and a fine, if the tax evasion is Rs.25,000 or less.
Why is it important to submit Form 15G/15H?
- Avoid TDS Deduction: If your interest income exceeds a certain threshold (currently Rs.40,000 for general citizens and Rs.50,000 for senior citizens in banks/post offices), the payer is legally required to deduct TDS. Submitting the relevant form stops this deduction.
- Immediate Cash Flow: You receive the full interest amount without any tax being withheld, which improves your immediate cash flow.
- Avoid Refund Process: If TDS is deducted and your total income is below the taxable limit, you will have to file an Income Tax Return (ITR) just to claim a refund. These forms help you avoid this hassle entirely.
FAQs on Form 15G/15H for RDs
- Who can use Form 15H?
Form 15H is a self-declaration form for resident individuals above 60 years of age. This form can be submitted by senior citizens even if their annual income is above the basic exemption limit, but the tax on total income is zero.
- Is it mandatory for resident individuals to file Form 15G/15H?
No, it is not mandatory for resident individuals to file Form 15G/15H.
- Can I submit Form 15G even if my total annual income is above the exemption limit?
No, you cannot submit Form 15G if your total annual income is above the exemption limit. You can submit this form only if your total income is below the exemption limit and net payable tax is zero.
- Will I have to pay any penalty for not filing Form 15G/15H?
No, you will not be penalized for not filing Form 15G/15H.
- Can NRIs submit Form 15G/15H?
No, NRIs cannot submit Form 15G/15H. This form is only for resident individuals.
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