Forms 15G & 15H: What can you do to ensure the bank does not deduct TDS on interest if your total income is not taxable?
Banks have to deduct
TDS when your interest income is more than Rs.40,000 in a year for individuals other than senior citizens (for senior citizens, the limit is Rs. 50,000) under
section 194A of the Income Tax Act. The bank adds deposits held in all its branches to calculate this limit.
However, if your total income is below the taxable limit, you can submit Form 15G and 15H to the bank, requesting them not to deduct any TDS.
Form 15G and Form 15H are self-declaration forms that individuals submit to the bank requesting not to deduct TDS on interest income as their income is below the basic exemption limit.
For this, providing
PAN is compulsory. Some banks allow you to submit these forms online through the bank’s website.
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FORM 15G
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FORM 15H
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Resident Individual or HUF or trust or any other assessee
but not a company or a firm with age less than 60 years
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Resident Individual with an age 60 years or more i.e
Senior citizen.
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Tax calculated on your total income is Nil
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Tax calculated on your Total Income is Nil
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The total interest income subject for the year is less
than the basic exemption limit of that year, which is Rs.2.5 lakh for
financial year 2020-21 (AY 2021-22)
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Please note that benefits of Form 15G and 15H cannot be
claimed by Non residents.
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Example to understand who can submit Form 15G and form 15H
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Age
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50 years
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21 years
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65 years
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68 years
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Salary
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Rs. 1,80,000
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–
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–
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–
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Pension
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–
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–
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Rs. 1,00,000
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–
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FD interest income
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Rs. 85,000
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Rs. 2,60,000
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Rs. 1,80,000
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Rs. 3,30,000
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Total Income before allowing section 80 Deductions
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Rs. 2,65,000
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Rs. 2,60,000
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Rs. 2,80,000
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Rs. 3,30,000
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Deductions under section 80
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Rs. 45,000
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Rs. 30,000
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Rs. 10,000
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Rs. 55,000
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Taxable income
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Rs. 2,20,000
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Rs. 2,30,000
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Rs. 2,70,000
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Rs. 2,75,000
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Minimum exempt income
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Rs. 2,50,000
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Rs. 2,50,000
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Rs. 3,00,000
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Rs. 3,00,000
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Eligible to submit Form 15G
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Yes
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No
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No
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No
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Eligible to submit Form 15H
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No
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No
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Yes
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Yes
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Age less than 60 year
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Yes
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Yes
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No
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No
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Age more than 60 year
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No
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No
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Yes
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Yes
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Tax on total income is Nil
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Yes
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Yes
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Yes
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Yes
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Interest income is less than basic exemption limit
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Yes
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No
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N.A.
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N.A.
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Form to be submitted
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Form 15G
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Cannot Submit
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Form 15H
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Form 15H
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Essential points for understanding the above example-
- Form 15G and 15H are applicable only for ‘residents’; hence a non-resident cannot benefit from these Forms.
- Deepak cannot submit Form 15G even though Tax on total income is Nil because his interest income is more than the basic exemption limit.
- Rahul, who is a senior citizen, can submit form 15H as his tax liability is Nil.
- Condition of interest income being more than the basic exemption limit is applicable for form 15G only and not for form 15H. Form 15H can be submitted by senior citizens even if the interest income is more than the basic tax exemption limit, provided that the taxable income (after deductions) is below the exemption limit.
Form 15G and Form 15H are valid for one financial year. So, please submit these forms every year at the beginning of the financial year. This will ensure that the bank does not deduct any TDS on your interest income.
For FY 2020-21, because of the spread of the second wave of COVID-19, the government has extended the validity of Form 15G and Form 15H up to 30th June 2021 from 31st March 2021.
A lot of taxpayers forget to submit Form 15G and Form 15H on time. In such a situation, the bank might have already deducted the TDS. Based on your case, you can do any of the following.
- File your income tax return to claim a TDS refund: The only way to seek a refund of excess TDS deducted is by filing your income tax return. Banks or other deductors cannot refund TDS to you since they have already deposited it to the income tax department. The income tax department will refund excess TDS after you file an income tax return.
- Submit Form 15G and Form 15H immediately: Most banks deduct TDS every quarter. If you forget to submit Form 15G or Form 15H, don’t worry. Submit it at the earliest so that no TDS is deducted for the remaining financial year.
While these forms can be submitted to banks to make sure TDS is not deducted on interest, there are a few other places too where you can submit them.
- TDS on EPF withdrawal
TDS is deducted on EPF balance if withdrawn before 5 years of continuous service.
If you have had less than 5 years of service and plan to
withdraw your EPF balance of more than Rs.50,000, you can submit Form 15G or Form15H. However, you must fulfil the conditions (listed above) to apply for these forms. It means the tax on your total income, including the EPF balance withdrawn, should be nil.
- TDS on income from corporate bonds
If you hold corporate bonds, TDS is deducted if your income exceeds Rs 5,000. You can submit Form 15G or Form 15H to the issuer requesting non-deduction of TDS.
- LIC premium receipts
With effect from October 2014, if the amount received from a policy exceeds Rs 1 lakh and it is taxable, 2% TDS shall be deducted by the insurer before paying.
From 1st September 2019, TDS is 5% on the income comprising the proceeds paid or payable upon maturity.
In case of failure to submit PAN details of the deductee to the LIC companies, TDS is to be deducted at the rate of 20%.
You can submit Form 15G/Form 15H to request that no TDS be deducted since the tax on your total income is nil.
- TDS on post office deposits
Post offices that are digitised also deduct TDS and accept Form 15G or Form 15H if you meet the conditions applicable for submitting them.
- TDS on rent
TDS is deducted on rent exceeding Rs 2.4 lakh annually. If the tax on your total income is nil, you 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 if it exceeds Rs 15000 per financial year. However, insurance agents can submit Form 15G/Form 15H for non-deduction of TDS if tax on their total income is nil.
Important Information for Deductors
If you are a TDS deductor, the Income-tax Act requires you to allot a Unique Identification Number or UIN to everyone who submits the Form 15G/Form 15H. You must file a statement of Form 15G/Form 15H every quarter and must retain these forms for 7 years.
- Name of Assesse (Declarant) – Enter your name as per income tax records & PAN number as per your PAN card,
- Status – Input Whether you are an individual or HUF
- Previous Year –Input the current financial year for which you are filing up the form
- Residential Status – Residents can only fill this form.
- Fill in Address details along with PIN code, email, and telephone number.
- Whether assessed to tax under the income tax act, 1961? – If your income was above the taxable limit in any of the past 6 years, answer this question with ‘yes”.
- If yes, the latest assessment year for which assessed – mention the latest year your income was above the taxable limit.
- Estimated income for which declaration is made – fill sum of interest or other income on which TDS should not be deducted.
- Estimated total income of the previous year in which income is mentioned in column 16 to be included – Calculate your total income from all sources, salary, stipend, interest income, and any other income you have earned during the year. Include the income mentioned in 16, above
- Details of Form 15G other than this form filed during the previous year, if any;- please mention the total number of Form 15G filed for that particular year.
- Also, fill the aggregate amount of income for which form 15G filed – Also, provide the total income for which Form 15G was filed.
- Full details of income for which declaration is filed; Identification number of relevant investment/account etc., Nature of Income, Section under which tax is deductible, Amount of income – Provide fixed deposit account number, recurring deposit details, details of NSCs, life insurance policy number etc. (many of these are chargeable to tax under section 56 of the income tax act)
- Signatures – mention your capacity when signing on behalf of a HUF or AOP
Do not submit the form if such income has to be Clubbed with the income of another person
Do not submit Form 15G if your income has to be clubbed with someone else. Interest income from an FD for a non-earning spouse or a child has to be clubbed with the depositor's income. In such a case, Form 15G is not valid. PAN of the depositor is mandatory, and TDS should be deducted in the name of the depositor.