People who have a gross income below the tax-worthy limit are eligible to submit Form 15G and Form 15H to the bank and approach them to not deduct TDS over the interest amount. These forms enable them to claim receipts without facing tax deductions. Indian banks deduct TDS if the earnings of an individual exceed ₹10,000 per year. The bank generally determines the limit by considering the deposits held in different branches. In case, the total income is not eligible for a tax deduction, the individual needs to submit Form 15H and Form 15G to the bank requesting not to debit TDS on interest. In this article, we will be discussing the forms 15H and 15G and more.
Did you know that Form 15G can be submitted by individuals below the Age of 65 Years while form 15H can be submitted by senior citizens i.e. individuals above the age of 65 years?
Forms 15G & 15H
The latest Form 15G and Form 15H allows you to avoid TDS deduction for the interest earned during the financial year. If you are unaware of your financial status, then these forms can be used by banks to verify the details. The form (Form 15G by Sr. Manager / PO of the concerned bank) has different sections depending on the nature of business. The purpose of each section is different and it is essential to fill out every section correctly to avoid any errors in your statement. Here is everything that you need to know about Form 15G and Form 15H:
What is Form 15H?
15H form is a declaration form under the 1C sub-section of section 197A under the Income Tax Act. An individual aged 65 years or more can avail of this form to claim receipts without any tax deduction.
What are the Eligibility Criteria for Submitting a 15H form?
The eligibility criteria for submitting the declaration through Form 15H is as follows-’
- Form 15H can be submitted by people who are at least 65 years old at the time of submitting this form. However, this age limit is reduced to 60 as declared on 1st July 2012.
- The individual must not have paid any tax in the previous since her/his income is non-taxable or below the taxable amount. Therefore the estimated tax for those 12 months should be zero.
- The individual has to submit form 15h to the deductors to whom any loan was asked for, i.e., the form needs to be submitted to every other bank branch from where the individual is receiving interest.
- It should be submitted to all banks in case the individual receives interest exceeding ₹10,000 per year from any branch.
- It has to be submitted to the bank before the first interest is paid. Even though it is not compulsory, it will help prevent the bank from debiting the TDS.
- It needs to be submitted in case the income from interest from any source except deposit, namely, interest on an advance, a loan, bonds, debentures etc. exceeds ₹5,000 at the end of the year.
What is Form 15G?
15G Form is a form of the declaration mentioned under sub-sections 1 and 1A under section 197A included in the Income Tax Act, 1961, This has to be filled by an individual and not a firm or company so that she/he can claim the receipts without facing tax deduction.
What are the Eligibility Criteria for Submitting the 15G form?
The eligibility criteria for submitting the declaration through Form 15G is as follows-
- Form 15G is to be submitted by people who are not yet 65 years old or by a HUF or Hindu Undivided Family.
- This has to be submitted before receiving the first interest generated from a fixed deposit.
- It is to be submitted only by the individuals whose payable tax on total earnings is zero.
- This form needs to be submitted to all deductors from whom a loan is received, i.e., form 15G has to be submitted to every other bank from which interest is being collected by the individual.
- The individual availing of this service should be an Indian resident.
- The subtotal interest earnings have to be less than the least exemption amount of that annum. The minimum exemption financial amount for the year 2020-21 is fixed at ₹2,50,000.
Why do you Need to Submit Form 15H and 15G?
Form 15H and form 15G usually need to be submitted to the banks for the prevention of the deduction of TDS on bank interest. However, these forms are eligible to be submitted for some other reasons:
TDS For Withdrawal of EPF
Normally, TDS is deducted on EPF if anyone withdraws her/his EPF before completing the 5 years of uninterrupted service. If the EPF balance of an individual exceeds ₹ 50,000 and intends to withdraw it before completing the 5 years of continuous service, the person needs to submit these forms.
TDS on Earnings from Corporate Bonds
An individual can face a TDS deduction from corporate bonds in case the amount of income generated from the bonds exceeds ₹5,000.
TDS on Rent
An individual will be charged with TDS on rent in case the net payment of a year exceeds ₹1.8 Lakhs. If the person’s total earnings are nil, she/he is eligible to submit the form 15H/15G requesting the tenant not to deduct any TDS.
When Should You Submit Form 15G and Form 15H?
Since form 15H and form 15G are only valid for a financial year, you need to submit these forms every annum at the very beginning of the financial year. This is to make sure that the bank does not deduct any TDS from your interest income. Due to the spread of the second Covid-19 wave, the Government extended the validity of both forms for the financial year 2020-21 up to 30th June 2021 from 31st March.
Things to Consider Before Submitting Form 15H and Form 15G
Certain things should be kept in mind before an individual submits form 15g/15h-
●An individual is eligible to submit form 15G/15H to the bank only if she/he has a valid PAN. If not, the tax amount to be deducted will be at the rate of 20%. Therefore, a valid copy of the PAN card along with the cover letter needs to be submitted.
●The person needs to ensure that she/he receives an acknowledgment of submission of the Form 15g/h. Acknowledgment while submitting PAN is beneficial to avoid future disputes with the bank.
● The revised form states, the individual needs to submit the detailed information of the form 15g/h submitted to other banks by the individual along with the income from interest mentioned in those forms.
● After submission of PAN details, the respective assessing official will be able to access all information voluntarily submitted by the individual to any other bank and can detect any inaccuracy in the information provided by the person.
● As per Indian law, there is a provision for imprisonment of at least three months in case an individual is detected to have provided false information to any of the declaration forms submitted to the banks.
How to fill out form 15g?
Follow the steps below to fill up your form 15G-
- Name of Declarant- Enter your name as mentioned in IT records and your PAN number.
Status- Enter stating if you are HUF or an individual.
- Previous Year- Input the financial year for which you want to fill up this form
- Residential Status- Fill up your residential status and if you are an Indian resident.
- Fill in your address details and PIN code, contact number and email
- Whether assessed to tax under the income tax act, 1961?- If your earnings was exceeding the taxable limit in any of the previous 6 financial years, write ‘yes’.
- If yes, the latest assessment year for which assessed- Mention the last year in which your income exceeded the taxable limit.
- Estimated income for which declaration is made- fill in the sum of interest and other income on which TDS is not to be deducted.
- Estimated income of the past year in which income mentioned in the 16th column is to be included- Calculate your gross income from salary, interest income, stipend and other sources of income in that year.
- Details of form 15G- Mention the subtotal form 15G filed for the year.
- Fill in the aggregate amount of earnings- Provide the gross earnings for which you filed form 15G.
- Fill up the details of income- Provide the amount of income, fixed deposit account number, details of NSCs, recurring deposit, LIC number etc.
- Signatures- Mention the capacity while signing on behalf of an AOP or a HUF.
If you own a securities and money market investment plan (SMP) account, you should know about Form 15G and Form 15H. It's because these forms help you with the tax deduction on interest earned when your interest is more than ₹ 40,000 in a financial year. Many people are not aware of this. Therefore, they do not submit it as they intend to receive TDS deducted by the bank/post office on the interest their investments generate.
As one of your investments, you should have a fixed deposit or post office deposit. In case, your interest is less than ₹40,000 in a year, you don’t need to include TDS on your annual tax return and submit Form 15G to the bank or post office. But if your income is more than ₹2, 50,000 per year for each financial year (12 months), you must submit Form 15G and Form 15H to the bank or post office and ask them that they don’t deduct any TDS.Hopefully, this article helped you understand form 15, 15 g form meaning, form 15g/h and more.
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