In India, payments are subject to deduction of tax at source (popularly known as TDS). These payments popularly include interest from the bank on fixed deposits or savings bank account, professional fee payment, etc.
To claim certain receipts without deduction of tax, a person is required to fill Form 15G and Form 15H. Through these forms, anybody can give a self declaration that his total taxable income is below taxable limits and he will not be required to pay tax in a particular year.
Based on this declaration, the payer will not deduct any TDS while paying the sum.
The taxpayer should submit this form to each bank branch through which he/she is recieving interest.
Taxpayer should submit these Forms to the bank before the payment at the beginning of the year or at least before the bank pays any interest for any period.
Forms 15G and 15H are valid for one financial year. So you have to submit these forms every year in case you wish to claim the benefits of non-deduction of TDS.
This form can be downloaded from any bank’s website or can be submitted offline in any bank (banks usually have a physical copy – don’t hesitate to ask them). To summarize:
- Form 15H is for senior citizens and form 15G is for others.
- These forms are not applicable for Non-resident Indians (NRIs).
- PAN card is essential for an individual to submit Form 15G/Form 15H. Without having a valid PAN, bank would not accept Form 15G and Form 15H.
Now, let us understand both the forms in detail.
What is Form 15G?
Form 15G can be submitted by a person who is below 60 year only if one didn’t have any tax liability in previous year.
Example: TDS is deducted by the bank when the interest income of the taxpayer is more than Rs.10, 000. If the total income of the taxpayer is below the taxable limit, then, you can submit form 15G to the bank requesting not to deduct the TDS on the interest.
Who can submit Form 15G?
Form 15G can be submitted by:
- An individual or HUF or Trust or any other assessee but not company or a firm
- A resident of India
- Less than 60 years of age
- An individual whose income tax liability is Nil
- An individual whose total income is below than Rs.2,50,000 for financial year 2019-20 (A.Y. 2020-21).
What is Form 15H?
Form 15H is a declaration under sub-section (1C) of section 197A of the Income Tax Act, 1961, to be made by an individual of the age of 60 years or more to claim certain receipts without deduction of tax.
Who can submit Form 15H?
Form 15H can be submitted by:
- An individual
- A resident of India
- An individual whose age is 60 or more or will be 60 years old during the year for which you are submitting the form
- An individual whose income tax calculation is nil
- An individual whose total income is below maximum limit that is not chargeable to tax for financial year 2019-20 (A.Y. 2020-21).
Documents required in Form 15G and Form 15H
Form 15G/ 15H is a two page application form comprising of Part A and Part B.
Part A consists of:
- Name and PAN details.
- Relevant financial year.
- Address and contact details.
- Details about income – including nature of income and section under which it is deductible.
- Declaration stating that the information provided is accurate and not misleading.
Part B consists of:
- Name of individual with tax liability.
- PAN and TAN details.
- Aadhaar number.
- Address and contact details.
- Amount of income paid.
Incomes for which Form 15G or Form 15H can be submitted
While these forms can be submitted to banks to make sure TDS is not deducted on interest, there a few other places where you can take the benefit of this form.
- TDS on EPF withdrawal – TDS is deducted on EPF balances if amount is withdrawn before 5 years of continuous service and is more than Rs 50,000. So,you can submit Form 15G/Form15H to avoid deduction of TDS. However, tax on your total income including EPF balance withdrawn should be nil.
- TDS on income from corporate bonds – If you hold corporate bonds, TDS is deducted on them if your income from them exceeds Rs 5,000. You can submit Form 15G/Form15H to the issuer requesting non-deduction of TDS.
- TDS on post office deposits – Post offices which are digitised also deduct TDS and accept Form 15G/Form15H if you meet the conditions applicable for submitting them.
- TDS on rent – TDS is deducted on rent if total rental payment in a year exceed Rs 2,40,000. If tax on your total income is nil, you can submit Form 15G/Form15H to request the tenant to not deduct TDS (applicable from 1 st June 2016).
- TDS on Insurance Commission – TDS is deducted on insurance commission if it exceeds Rs 15,000 per financial year. But with effect from 01.06.2017 insurance agents can submit Form 15G/Form 15H for non-deduction of TDS if the tax on their total income is nil.
What happens if you miss filing Form 15G or Form 15H?
This can lead to two scenarios:
- If you are a taxpayer and fall under tax slab, the TDS deducted by the bank will be mentioned in the Form 16A or TDS certificate. You can adjust such TDS while filing income tax return and you have to pay tax after adjustment of the TDS amount.
- If you are not supposed to pay tax or you does not falls under anytax slab, the tax deducted by the bank would be refunded by the Income tax department when you file an income tax return.
Penalty for Filing Form 15G/15H if you are not eligible
A false or wrong declaration in Form 15G/15H attracts penalty under Section 277 of the Income Tax Act. Prosecution includes imprisonment which may range from three months to two years along with fine. The term can be extended up to seven years and with fine, where tax sought to be evaded exceeds Rs 25 lakh.
In case a person becomes ineligible afterwards
In a case where at the beginning of year you submit 15G/15H because you meets the specified criteria and afterwards you get unexpected income and thus do not fall within specified criteria then you need to submit a 15G/15H withdrawal application and the bank has to deduct TDS on next payment to your account.