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Forms 15G and 15H to Save TDS on Interest Income

Forms 15G and 15H to save TDS on Interest Income. In the previous article, we have given How to Calculate TDS on Salary and complete details about Income Tax Form 16. Today we are providing the complete details that How to avoid TDS by filling form 15G and 15H. Tax payers seeking non deduction of tax from certain incomes are required to file a self declaration in Form No. 15G or Form No.15H as per the provisions of Section 197A of the Income-tax Act, 1961. The tax payers can now generate and submit Form 15G/Form 15H online provided their banker created a link on their respective bank’s Internet Banking portal. In this post, I have provided detailed step by step detailed instructions on how to fill Form 15G or Form 15H.

Form 15G eligibility:

  • You are individual below 60 years of age or a HUF
  • You must be Indian resident
  • The total interest income for the financial year is less than the minimum tax exemption limit for the year. For FY 2015-16 this limit is Rs 2.5 lakhs.
  • The total tax calculated after taking all the deductions and exemptions is NIL for the financial year.

Form 15H eligibility:

  • Your age is 60 years or more
  • You must be Indian resident
  • The total tax calculated after taking all the deductions and exemptions is NIL for the financial year.
  • The figure below gives an example when people are eligible to file Form 15G/H.

How to Fill Form 15G/15H

Part-1 of Form no 15G:

Form 15G Part 1

Let us now go through each point of Part-1 of Form no 15G.

  • 1 – Name of the individual who is making the declaration.
  • 2 – PAN(Permanent Account Number) of the tax assessee. The declaration is treated as invalid if an individual fails to furnish his / her valid PAN.
  • 3 – Status – Declaration can be furnished by an individual or a person (other than a company or a firm).
  • 4 – The financial year to which the mentioned income pertains to.
  • 5 – Residential Status ie Resident Indian or NRI etc.,
  • 6 to 14 – Your Address & contact details.
  • 15 (a) – Mention ‘Yes‘ if assessed to tax under the provisions of Income-tax Act, 1961 for any of the assessment
    year out of six assessment years preceding the year in which the declaration is filed.
  • 15 (b) – Mention latest Assessment Year for which Income tax return has been submitted and processed.
  • 16 – Estimated income for which this declaration is made.
  • 17 – Estimated total income of the P.Y. (Present / Financial Year) including the income mentioned in point no 16.
  • 18 – In case any declaration(s) in Form No. 15G is filed before filing the new declaration during the Financial year, you have to mention the total number of such Form No. 15G filed along with the aggregate amount of income for which said declaration(s) have been filed.
  • 19 – Mention the distinctive number of shares, account number of term deposit, recurring deposit, National Savings  Schemes, life insurance policy number, employee code, etc.,
  • Verify, declare and sign the form.

Part 2 This section is to be filled by the person/institution responsible for paying the income.

new-form-15g-part-2

The basic conditions for filing 15G are:

  • The final tax on estimated total income computed as per the Income Tax Act should be nil
  • The aggregate of the interest received during the financial year should not exceed the basic exemption slab of that assessment year ex: 2.5 lakh in AY 2015-16, AY 2016-17.

If these criteria are met, you can submit Form 15G and the entire interest income would be credited without any tax cut. Please note that  You need to meet both criteria. Even if the interest income is less than the basic exemption allowed during that financial year, but your total tax liability is not nil, you will not be eligible for filing Form 15G. The reverse is also true. Say your income is Rs 4 lakh, of which Rs 3 lakh is earned as interest from your investments such as FDs in  bank. You might invest Rs 1.5 lakh in PPF and be out of the tax net, but you are not eligible for Form 15G as though your tax liability is zero, the interest income is higher than the basic exemption. The refund route is your only recourse.

How to fill up Form 15H:

There is not much of difference while filling up form 15H except it has to be submitted by individual who is of the age of 60 years or more claiming certain receipts without deduction of tax.

I. The fields of Part I such as  1, 2, 3, 5, 6, 8, 9, 11, 12, 13, 15 and 16 are for personal details like Name, PAN and Contact Information. Assessment year (AY) is to be put in field 4. If the interest applies to say the financial year 2016-17 then relevant AY is 2017-18.

II. In fields 7 and ten you need to enter details Income Tax Assessment office details of the last time you were assessed which you can find out from your PAN number.

III. Field 14 you can enter the year your income was last assessed. Field 17 and 20 required to be filled with present Ward/Circle and AO code.

IV. You can leave field 18 if not relevant. Interest amount from your deposit for the relevant previous year needs to enter in filed 21. Filed 22 estimated total income (mentioned in column 21)of the previous year.

V. Field 23 should be filled with the details of your deposits. In Schedule-III details of the sums given by the declarant on interest should be entered. Here you need to fill FD number, deposit amount, the start date of the deposit, tenure of the deposit and interest rate etc.

VI. At last place your signature within the given space as Signature of Declarant and leave Part II since it is for the bank/company to fill the necessary details.

Form 15H can be only filed by individuals above 60. This form imposes only the first condition,the final tax on the investor’s estimated total income should be nil. So, if you are above 60, your taxable income for the financial year can be up to Rs 3 lakh for you to be eligible for 15H. For super senior citizens above 80 years, this limit is Rs 5 lakh. Image below shows the cases where Form 15G/15H is not allowed.

Points to remember:

a) Do not submit the form if such income has to be Clubbed with the income of another person

Form 15G should not be submitted if your income has to clubbed with someone else. Interest income from money invested in a FD for a non-earning spouse or a child, has to be clubbed with the income of the depositor. In such a case Form 15G cannot be submitted. PAN of the depositor should be provided and TDS should be deducted in the name of the depositor.

b) If incorrect information is submitted in this form, the signatory may be prosecuted under the provisions of the income tax act

c) The new Form 15G has to be submitted at the start of every quarter.

d) Below are some of the common rates for your reference

Investment Income Tax Section Cut Off (Rs.) TDS when Valid PAN submitted PAN not submitted
Bank – Fixed/Recurring Deposits 194A 10,000 10% 20.00%
Premature withdrawal from EPF 192A 30,000 10% 34.61%
Interest on securities 193 10% 20.00%
Dividends 194 2,500 10% 20.00%
Interest other than interest on securities – Others (NCDs, etc) 194A 5,000 10% 20.00%

With effective from 1st June, 2016,  Rental income has also been allowed to be included in the Form 15G/ 15H declarations. The scope of income that can be included in the above forms is as under:

  • Amount received from EPF withdrawal
  • Dividend Income
  • Interest other than Interest on Securities
  • Sum received from Life Insurance Policy
  • Sum received from National Savings Scheme &
  • Rental income has also been allowed to be included in the declarations.

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