Submission of Form 15G & Form 15H to avoid TDS on interest income


1. What is Form 15G and Form 15H?

Form 15G and Form 15H are forms which a person can submit to make sure TDS is not deducted on income if that assessee meet the conditions mentioned in Point No. 2 and 3. Also, that person must have a PAN before applying for these forms. These forms can be submitted online through the bank’s website for some banks.

Form 15H is for senior citizens, those who are 60 years or above while Form 15G is for other assessee.

Form 15G and Form 15H are valid for one financial year i.e from 1st of April to 31st March. So the person has to submit the form every year, provided one is eligible. Submission of the same as soon as the financial year starts will ensure the bank does not deduct any TDS on the interest income.

2. Conditions to fulfill to submit Form 15G

i. An individual or HUF or trust or any other assessee but not a company or a firm.
ii. Must be an Indian Resident.
iii. Should be less than 60 years old.
iv. Tax calculated on Total Income is nil for that financial year.
v. The aggregate of of interest received does not exceed the basic exemption limit of Rs. 2.50 lakhs for the Financial Year.

3. Conditions to fulfill to submit Form 15H

i. Must be an Individual (Senior citizen and Super senior citizen).

ii. Must be an Indian Resident.

iii. The assesse is 60 years old or will be 60 years old during the year for which the form is submitted.

iv. Tax calculated on Total Income is nil.

v. The aggregate of interest received does not exceed the basic exemption limit of Rs.3 lakhs for senior citizens and Rs. 5 lakhs for super senior citizens for the Financial Year

4. When will TDS be deducted on interest income?

The interest earned on investment in fixed deposit, recurring deposit or company deposit is taxed. If accumulated interest income exceeds Rs. 10,000 in a year then 10 percent TDS is deducted by the respective bank on entire interest amount. The TDS limit for interest income in case of company deposit is Rs.5,000.

From April 1, 2018, a new section has been inserted in the Income Tax Act, 1961, U/S 80TTB, that allows a deduction of RS. 50,000 in respect of interest income earned by senior citizens.

5. Forgot to submit Form 15G or Form 15H?

A lot of taxpayers forgets to submit Form 15G and Form 15H timely. In such a situation TDS may already be deducted by the bank.

When the TDS has been deducted:-

i) File the income tax return to claim refund of TDS.

The only way to seek a refund of excess TDS deducted is by filing the income tax return. Banks or other deductors cannot refund TDS, since they have already deposited it to the income tax department. Income tax department will refund the TDS, after the assessee file an income tax return.

ii) Submit Form 15G and Form 15H immediately

TDS is usually deducted quarterly. If one forgot to submit Form 15G/Form 15H submit it at the earliest, so that no TDS is deducted for the remaining financial year. To claim the refund of the TDS deducted, file the Income tax return.

5. Frequently Asked Questions

1. Is it required to submit Form 15G/ Form15H at all the branches of the bank?

Yes, one must submit at each branch of the bank from which one will receive interest income. Although, TDS is deducted when aggregate total interest earned from all branches exceeds Rs 10,000.

2. Is it required to submit Form 15G/ Form15H every financial year?

Yes, one must submit a fresh form every financial year if the assessee fulfills all the above conditions.

3. Does filing Form 15G/Form15H mean the interest income is not taxable?

Form15G/Form15H is only a declaration that no TDS should be deducted on the interest income since tax on total income is nil.

4. Does the interest income become tax free on submission of Form 15G/Form15H?

Interest income from fixed deposits and recurring deposits is taxable. By submitting Form 15G/ 15H shows that the total income for that Financial year is below the exemption limit so the TDS should not be deducted.

5. Can a person submit Form 15G and Form 15H even if having taxable income?

One must intimate to the bank that tax on total income is not zero. The bank will make changes and deduct TDS.

6. Does the person have to submit this form to the income tax department? 

These forms don’t have to be submitted to the income tax department. The deductor i.e the institution itself will prepare and submit to the income tax department.

The author is a member of the Institute of Certified Practising Accountant, Australia and an Associate member of Institute of Chartered Accountants of India and can be reached at casusmitadutta@gmail.com. Disclaimer: The facts and opinions written in this column are those of the author and have been prepared on the basis of relevant provisions and information available at the time of preparation. The article does not constitute any professional advice or formal recommendation. The author has undertaken utmost care to disseminate true and correct views and does not accept liability of any errors or omissions.

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ARUN KUMAR  
on 29 January 2019
Published in Income Tax
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