Form 15G and Form 15H can help you save extra deduction of tax from your income. Do you know when and how this is applicable?
Keep reading further, for complete details on What is Form 15G and Form 15H? When to submit these forms and avoid TDS.
Recently, I met my friend after a long time and we had a good discussion on a very important topic related to Tax deducted at source or TDS. I thought this will really be helpful to the ones like him so let me just pen it down…
Let me share the whole story with you…
My friend’s father, “Roshan Uncle” (I call him by this name) retired from service last year.He had invested Rs.10 lakhs in Fixed deposits. He gets an interest @ 8% annually on his deposits that accounts to Rs.80000 per year approximately. Now, Roshan Uncle did not have any other source of income besides this FD interest income during the whole financial year.
Ideally, he was not liable to pay any income tax since his Total income was much below the taxable limit as per Individual tax slab rates.
But, their bank deducted tax on the FD interest income stating that the income exceeds Rs.10000 and hence tax needs to be deducted on it. My friend was really worried as to why so? Let me clarify…he didn’t have any knowledge on taxes.
He had only heard from somewhere that You don’t need to pay tax on such less income.But,he had no idea about it…
When I met him,I was surprised to know that he was missing a great opportunity to avoid this situation.Why didn’t you submit Form 15G to your bank ? Now,the only way is to file your Income tax return before due date and claim the refund.
Just due to his negligence,he paid extra tax and now has to wait for the processing of the refund.
But, why wait so long? When you could have avoided this tax deduction just at the very beginning by submitting Form 15G to your bank. You could have saved yourself from any extra deduction of tax at the very first step.
So, I decided to share all details about Form 15G/Form 15H: What is Form 15G anf Form 15H? Who is eligible to furnish Form 15G and Form 15H?
Keep reading further and avoid yourself from landing in the above situation unlike Roshan Uncle…
What is Form 15G and Form 15H ?
Form 15G and Form 15H are self declaration forms that are required to be submitted for NIL or Lower deduction of TDS on Interest or certain other incomes.
So, taxpayers who seek non deduction of tax on certain incomes will have to furnish Form 15G or Form 15H (as applicable)as per provisions of Section 197A of The Income Tax Act, 1961.
e.g. Banks and other financial institutions are authorised to deduct tax at source if the Interest earned on Fixed deposits during a particular financial year exceeds Rs.10000.
But,if you don’t fall in the tax ambit, you need to submit Form 15G or Form 15 H in order to avoid any excess deduction of tax on the income earned.
Similarly, in case of few other incomes (as mentioned below) you need to fill and submit these forms to avoid unnecessary or excess deduction of tax at source.
Form 15G is similar to Form 15H, the difference being that Form 15H is to be furnished by senior citizens i.e. persons who are of 60 years or above.
While Form 15G is to be furnished by persons below the age of 60 years.
Form 15G and Form 15H: Important points
- Resident Individual below 60 years of age are eligible to furnish this form.
- Hindu Undivided Family(HUF) can submit Form 15G.
- Only Resident Indians, HUF, AOP, BOI, trusts are eligible for this. Firm and Company are not allowed to furnish Form 15G.
- NRIs are not allowed to submit Form 15G.
- Only persons with Nil tax liability and income below permissible limits can make use of this form.
- Only Resident Individuals who are 60 years or above are eligible to furnish Form 15H.
- HUF cannot submit Form 15H.
- The final tax calculated on your estimated income is NIL.
Form 15G and Form 15H: Common points to be considered
- These forms are valid for only a single financial year.
- You need to submit Form 15G or Form 15H (as applicable) in each financial year to your deductor, provided you are eligible to do so and you meet the specific conditions for submitting these forms.
- Form 15G or Form 15H should be submitted at the beginning of a financial year so as to avoid tax deduction.
- Submitting these forms means that you meet the specified conditions( as explained below).
Who is eligible to submit Form 15G?
You need to fully understand as to whether you are eligible to furnish Form 15G or not.
Individuals below the age of 60 years are supposed to furnish Form 15G in case of Nil/Lower deduction of taxes provided they fulfil the following 2 conditions:
- The final tax liability on Estimated Total Income(during the year) of the assessee is NIL and
- Aggregate of interest/other incomes is less than basic exemption limit (as per Individual Income tax slab rates).
You need to meet both the above conditions for becoming eligible to furnish Form 15G.
To further simplify things, let us discuss different scenarios with the help of Examples:
( F.Y. 2016-17 )
|Mr.X (Age : 58 years)||Mr.Y (Age : 50 years)||Mr.Z (Age : 55 years)|
|Total Income before deductions||300000||200000||280000|
|Less : Deductions||100000||150000||150000|
|Total Income (after deductions)||200000||50000||130000|
|Who is eligible to furnish Form 15G ?||No,Mr.X cannot furnish Form 15G, his total interest income which is his only income but the same exceeds basic exemption limit.||Yes,Mr.Y can furnish Form 15G since his Total Income before deductions < Basic exemption limit of Rs.2.5 lakhs||No,Mr.Z cannot submit Form 15G since his Total Income before deductions > Basic exemption limit of Rs.2.5 lakhs|
Who is eligible to submit Form 15 H?
Individuals who are the age of 60 years or above are supposed to furnish Form 15H in case of Nil/Lower deduction of taxes provided they fulfil the following 1 condition:
- The final tax liability on their Estimated Total Income during the financial year is NIL.
Persons submitting Form 15H are not required to fulfill the second condition as applicable in case of For 15G. So, a person is eligible to submit Form 15H even if his aggregate total income is greater than the basic exemption limit.
Let us clarify the same with an example:
( F.Y. 2016-17 )
|Mr.A (Age : 62 years)||Mr.B (Age : 63 years)|
|Less : Deductions||100000||100000|
|Total Income after deductions||250000||350000|
|Who is eligible to furnish Form 15H ?||Yes. Mr.A is eligible to submit Form 15H since his final tax liability is Nil.||No.Mr.B cannot furnish Form 15H since his total income is taxable.|
Which Incomes can be included in Form 15G and Form 15H?
These forms can be used only for Incomes in the nature of:
- Interest other than Interest on Securities (Bank/Company Deposits) like Interest on Fixed deposits or recurring deposits.
- Dividend Income.
- National Savings Scheme & Interest on Units.
- Interest of Securities. e.g.Government or PSU Bonds etc.
- Insurance maturity amount.
- Rental income has also been allowed to be included in Form 15G.
- Amount received on premature EPF withdrawal: Nowadays,in case of premature EPF withdrawal also one is required to fill Form 15G. So, if you are making EPF withdrawal before 5 years of continuous service and you don’t want tax to be deducted, you are required to make declaration in Form 15G.
You may also like: TDS on Rent Under Section 194I – All You need to know!
However, for other than above types of incomes, these forms cannot be used.
How to submit Form 15G and Form 15H?
Form 15G and Form 15H can be submitted in any of the two modes:
- In Paper Form i.e.submission of hard copy to the deductor.
- Electronically i.e.online submission of Form 15G.
With the introduction of electronic filing of Form no.15G and Form No.15H things have become much simpler for the Individuals seeking its benefit. CBDT has reduced the compliance burden of taxpayers by simplifying these forms and further introducing the online submission of Form no.15G/15H.
Source of pdf Forms obtained: State Bank of India official site.
You should never misuse 15G and 15H forms to avoid TDS. Furnish these forms only if you are eligible for it and never make any false declarations.
So, check for the specified conditions and if you find yourself eligible, go ahead and furnish Form 15G or Form 15H as applicable, to avoid unnecessary deduction of tax or TDS from your income.
Feel free to share your valuable feedback on the same. For any queries you can ask in the comment section below…
If you are thinking on how to go about your investment planning, you will probably like to have a look at our post: 7 Best Long term Investment Options
You want add to your knowledge on other tax free incomes,don’t miss the chance to checkout Tax free Incomes – You must know!