Form 15G and Form 15H - Save TDS on Interest Income

When you earn interest from fixed deposits, recurring deposits, or savings accounts, banks are required to deduct TDS (Tax Deducted at Source) if your interest income crosses a certain threshold limit. However, if your total income is below the taxable limit, you can submit Form 15G and Form 15H to avoid TDS. This article explains in detail everything you need to know about Form 15G and Form 15H to save TDS on interest income.

When is TDS Deducted on Interest Income?

As per section 194A of the Income Tax Act, banks are required to deduct TDS on interest income if it exceeds Rs. 40,000 in a financial year. For senior citizens, the limit is Rs. 50,000. The threshold applies to total interest earned across all branches of a bank.

Budget 2025 Update

The Budget 2025 has proposed some revisions in TDS thresholds:

Despite these changes, if your total income is below the taxable limit, you can avoid TDS by submitting Form 15G or Form 15H.

What are Form 15G and Form 15H?

Form 15G and Form 15H are self-declaration forms that a taxpayer submits to the bank or deductor requesting that TDS not be deducted on their interest income. These forms declare that the total income of the individual is below the taxable limit and hence no tax is payable.

Submission of PAN is mandatory while submitting these forms. Many banks provide online platforms for form submission.

Who Can Submit These Forms?

Conditions to be Fulfilled

For Form 15G:

1. The tax calculated on your total income must be nil.

2. The total interest income for the year should be less than the basic exemption limit. For FY 2023-24 (AY 2024-25), this limit is Rs. 2.5 lakhs (old regime) or Rs. 3 lakhs (new regime).

For Form 15H:

1. Only the first condition must be fulfilled: Tax on total income is nil.

2. Even if the interest income exceeds the basic exemption limit, a senior citizen can submit Form 15H if the taxable income (after deductions) is below the exemption limit.

Residents Only

Form 15G and Form 15H can only be submitted by residents of India. Non-residents are not eligible to claim these benefits.

Practical Examples

Let us consider a few scenarios to understand the eligibility for submitting Form 15G and Form 15H:

When and Where to Submit Form 15G/Form 15H?

These forms are valid for one financial year. Therefore, it is advised to submit them at the beginning of each financial year to avoid TDS deductions. Most banks deduct TDS quarterly, so if you miss submitting the form early, do so as soon as possible.

Apart from banks, these forms can also be submitted in the following cases:

• TDS on EPF Withdrawal: Applicable if EPF is withdrawn before 5 years of service and the amount exceeds Rs. 50,000.

• TDS on Corporate Bonds: If the interest exceeds Rs. 5,000.

• LIC Maturity Proceeds: If taxable and exceed Rs. 1 lakh, TDS is applicable. Form 15G/H can prevent deduction.

• Post Office Deposits: Digitised post offices also accept Form 15G/15H.

• TDS on Rent: If rent exceeds Rs. 2.4 lakh annually, and total income is below exemption limit.

• TDS on Insurance Commission: If commission exceeds Rs. 15,000.

• TDS on Dividends: If dividend income exceeds Rs. 5,000.

Have You Forgot to Submit Form 15G/Form 15H?

If you forget to submit the forms on time, banks may deduct TDS. Here are your options:

1. File ITR and Claim Refund: File your income tax return to claim the excess TDS deducted. The bank cannot refund it directly.

2. Submit the Form Immediately: To prevent TDS for the remaining year, submit the form as soon as possible.

Guidelines for Deductors

Every deductor is required to allot a Unique Identification Number (UIN) for each Form 15G/Form 15H submitted. These forms must be reported quarterly and retained for seven years.

How to Fill Form 15G?

Form 15G is a self-declaration form submitted by individuals or Hindu Undivided Families (HUFs) to request non-deduction of TDS on certain incomes like interest, provided their total income is below the taxable limit. To fill Form 15G correctly, begin by entering your name exactly as it appears on your PAN card and indicate your status as an individual or HUF. Mention the "Previous Year" as the relevant financial year for which the declaration is made, and confirm your residential status as a resident Indian. You must provide your complete address including PIN code, email ID, and phone number.

Next, declare whether you were assessed to tax in any of the last six years, and mention the latest assessment year when you filed your income tax return. In the section for estimated income, provide the specific amount of income (such as interest) on which you want to avoid TDS, followed by your total estimated income for the financial year. If you have submitted Form 15G elsewhere, mention the number of such forms and the total income declared. In the income details section, provide the account number, type of income, relevant section under which the declaration is made, and the income amount. Finally, sign the form in the appropriate capacity, especially if filing on behalf of an HUF or Association of Persons (AOP). It's important to note that Form 15G should not be filed if the income is to be clubbed with someone else’s income, such as that of a spouse or minor child. In such cases, TDS must be deducted in the name of the original depositor.

Conclusion

Form 15G and Form 15H are extremely useful tools for individuals, especially retirees and small depositors, to ensure that TDS is not deducted on their interest income unnecessarily. These forms must be submitted every financial year and are only applicable to residents whose total income is below the taxable limit.

If you need any support regarding TDS you can connect with Compliance Calendar experts through mail info@ccoffice.in or Call/Whatsapp at +91 9988424211.

FAQs

Q1. Who is eligible to submit Form 15G?

Ans. Form 15G can be submitted by a resident individual (below 60 years of age), Hindu Undivided Family (HUF), or trust whose total income is below the basic exemption limit, and the tax payable is nil. Companies and firms are not eligible to file Form 15G.

Q2. Can senior citizens submit Form 15G?

Ans. No. Senior citizens (aged 60 years or above) must submit Form 15H instead of Form 15G, provided their total tax liability is nil. Form 15H has slightly relaxed conditions compared to Form 15G.

Q3. What is the difference between Form 15G and Form 15H?

Ans. Form 15G is meant for individuals below 60 years of age and HUFs, while Form 15H is exclusively for senior citizens. One key difference is that Form 15G requires your total interest income to be below the basic exemption limit, whereas Form 15H does not have this condition.

Q4. What happens if I forget to submit Form 15G or Form 15H?

Ans. If you forget to submit Form 15G or 15H, the bank or deductor will deduct TDS from your interest income. You can later claim a refund of this TDS by filing your income tax return, provided your tax liability is nil.

Q5. Is submission of PAN mandatory with Form 15G/15H?

Ans. Yes. Providing your PAN is compulsory when submitting Form 15G or Form 15H. Without a valid PAN, the bank may deduct TDS at a higher rate of 20%.

Q6. Do I need to submit these forms every year?

Ans. Yes. Form 15G and Form 15H are valid only for one financial year. You must submit a new form at the beginning of each financial year to avoid TDS deductions on your interest income.

Q7. Can NRIs submit Form 15G or Form 15H?

Ans. No. Non-resident Indians (NRIs) are not eligible to submit either Form 15G or Form 15H. These forms are applicable only to resident individuals as per the Income Tax Act.

Q8. Where else can I submit Form 15G or Form 15H besides banks?

Ans. Apart from banks, Form 15G and Form 15H can be submitted to EPF authorities, insurance companies, post offices, companies issuing corporate bonds, tenants (in case of rental income), and others to avoid TDS if your total income is below the taxable limit.