Tax Planning
What is Form 15G and Form 15H, and how can you avoid the deduction of TDS?

What is Form 15G and Form 15H, and how can you avoid the deduction of TDS?

As per the provisions of Section 194A of the Income Tax Act, a bank is responsible for deducting TDS on the interest paid on the deposits of a customer if the total interest paid or credited exceeds the threshold limit of Rs. 40,000 (or, Rs. 50,000 for senior citizens) during a financial year.

However, if you satisfy certain conditions, you can fill in forms 15G or 15H and submit them to your bank and ask them not to deduct TDS.

Before you understand how you can save your TDS deduction, let us first understand “What are Form 15G and Form 15H, and the conditions for filling of these forms?”

What is Form 15G & 15H?

Form 15G & 15H are self-declaration forms filled out by an individual and submitted to the bank, asking them not to deduct TDS on interest paid on deposits.

An individual must have a PAN card to be eligible for relaxation from the deduction of TDS by filling out forms 15G or 15H.  

Form 15G & 15 H - Facts

Conditions for Filing Form 15G & Form 15H

Particulars Form 15G Form 15H
Who can use this form? Individuals under the age of 60 years, HUFs, trusts, and others, excluding corporations or partnership firms. Only resident senior citizens (i.e., resident individuals with an age of 60 years or more)
Tax Liability The tax on total income should be nil. The tax on total income should be nil.
Total interest income The total interest income of a person should be less than the basic exemption limit, i.e., Rs. 2.50 lacs. Senior citizens are not subject to such restrictions.

 

The main difference between form 15G and form 15H is that form 15H is meant only for senior citizens, as interest rates for senior citizens are different from those offered to other residents.

Let us understand the applicability of Form 15G and Form 15H and the difference between them through the following example:

Particulars 26 Years 48 Years 67 Years 83 Years
Annual Salary Rs. 1,90,000 Rs.2,20,000
Pension Nil Nil Rs. 1,20,000
Interest from Bank Rs.1,20,000 Rs. 1,10,000 Rs.2,80,000 Rs.4,40,000
Total income Rs.3,10,000 Rs.3,30,000 Rs.2,80,000 Rs.5,60,000
Deductions Nil Rs.1,00,000 Rs.25,000 Nil
Taxable Income Rs.3,10,000 Rs.2,30,000 Rs.2,55,000 Rs.5,60,000
Age Category Less than 60 years Less than 60 years More than 60 years More than 80 years
Basic Exemption Limit Rs.250,000 Rs.2,50,000 Rs.3,00,000 Rs.5,00,000
Whether tax on total income is Nil? No Yes Yes No
Whether interest income < Basic Exemption Limit? Yes Yes N.A. N.A.
Whether eligible to submit Form 15G/H No, since tax on total income is not Nil Yes, can submit Form 15G. Yes, can submit Form 15H. No, since tax on total income is not Nil

Components of Form 15G & Form 15H

Both Form 15G and 15H comprises 2 parts wherein the following details have to be filled in-

Part Form 15G Form 15H
Part I ·  Name and PAN No. of the Assessee

·  Status of Assessee

·  Residential Status

·  Financial year for which declaration is made

·  Address and contact details.

·  Estimates of income to be declared

·  Declaration about total form 15G filled and total income for which Form15G has been filled

·  Name of senior citizen aiming for relaxation from TDS deduction

·  Details regarding investments made

·  Amount invested in above investments

·  Date of such investments

·  Estimate amount to be received by the person

·  Age and profession of the person

·  Declaration

 

Part II The following details have to be filled by the person responsible for deducting TDS on the amount payable/ paid to the assessee.

·  Name and Complete Address

·  PAN No.

·  TAN No.

·  Contact details

·  Status of the Deductor

·  Date on which declaration is furnished

·  Period for which declaration is received

·  Amount paid and date of payment

The following details have to be filled by the person responsible for deducting TDS on the amount payable/ paid to the assessee.

·  Name and Complete Address

·  PAN No.

·  TAN No.

·  Contact details

·  Status of the Deductor

·  Date on which declaration is furnished

·  Period for which declaration is received

·  Amount paid and date of payment

Point to note: Forms 15G and 15H have a validity of one financial year. So a person has to submit these forms every year if they fulfil the conditions stated above.

Where else can you use Form 15 G or 15H apart from banks?

While these forms can be submitted to banks to avail relaxation from the deduction of TDS on interest received from banks, there are a few other cases where you can submit these forms to avoid deduction of TDS.

EPF Withdrawal

If you plan to withdraw an EPF amount of more than Rs. 50,000 before the end of 5 years of continuous service, TDS is deductible on it. However, if you fulfil the conditions listed above, you can submit Form 15G or Form 15H to avoid the deduction of TDs on such withdrawal.

LIC Premium Receipt

As per the provisions of Section 194DA of the Income Tax Act, if the amount received from a policy exceeds Rs 1 lakh and if the maturity proceeds are taxable, 5% TDS shall be deducted by the insurer before paying.

However, if the tax on your total income is nil, you can avail of relaxation from the deduction of TDS by filing Form 15G or Form 15H.

Interest on Corporate Bonds

If you have invested in corporate bonds, TDS is deductible on interest received on corporate bonds, if the interest amount exceeds Rs. 5,000. However, if the tax on your total income is nil, you can avoid the deduction of TDS by filing Form 15G or Form 15H.

TDS on Deposits in the Post Office

Investments made in deposits and savings schemes operated by the post office attract TDS deduction. However, if the tax on your total income is nil, you can avoid the deduction of TDS by filing Form 15G or Form 15H with the post office branch.

I hope this article clarifies all your doubts about Forms 15G and 15H, the difference between the two, and the conditions which you need to satisfy before filing it with the bank or other person responsible for the deduction of TDS.

If you have any further doubts, please drop them into the comment section and we would be more than happy to clarify them.

 

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