Form 15G/H: Who Should Submit and Why?
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Form 15G and Form 15H are important tools in the financial toolkit that help eligible taxpayers in avoiding unnecessary deduction of TDS on interest income. These forms are not meant for saving money but are all about efficient tax planning and keeping better control over your financial resources throughout the financial year.
In this article, we will explore in a deep detail, the specifics of Form 15G and Form 15H, determining who should submit these forms and why. Be it the young investor, Hindu Undivided Family (HUF), or the senior citizen, understanding these forms can help in enhancing financial planning and avoiding hassle of claiming refund of overpaid taxes. We will consider the eligibility criteria, look at the distinct differences between these two forms, and offer practical advice on how to fill them correctly so that you comply with your tax obligations.
Table of Contents
What are Form 15G and Form 15H?
Form 15G and Form 15H are forms used to provide self-declaration in India with the view of ensuring that TDS is not deducted in case of interest income pertaining to certain eligible individuals. These forms are very important to taxpayers with an interest income who want to avoid TDS in case their total income is below the taxable limit. They serve as declarations that one's interest income does not cross the basic exemption limit of the Income Tax. Therefore, TDS should not be deducted because they are not liable for income tax.
Difference between Form 15G/H
Difference between Form 15G/H are as follows:
Form 15G/H: Eligibility Criteria
Every taxpayer should first understand the eligibility criteria of Form 15G and Form 15H to make sure that TDS has not been deducted on the interest income where it is actually not applicable. Here is the detailed breakup that enumerates the eligibility criteria of each form:
Eligibility Criteria for Form 15G
Type of Applicant: Form 15G can be furnished by an individual or Hindu Undivided Family.
Age Limit: The individual needs to be less than 60 years while filing the form.
Residential Status: The applicant has to be a resident in India for the financial year for which the form is filed.
Tax Liability: Aggregate income, inclusive of interest income, should be less than the taxable limit. It basically implies that the total income estimated after deductions under Section 80C and others does not cross the basic exemption limit for the financial year.
Other Conditions: During the previous year, no tax on income should have been payable by the individual under self-assessment, and the aggregate amount of interest income has to be an amount otherwise exempt from TDS.
Eligibility Criteria for Form 15H
Type of Applicant: Only individual taxpayers can file form 15H. HUFs or trusts cannot file it.
Age Limit: The individual must have completed 60 years at any time during the previous financial year for which form 15H is submitted.
Residential Status: The applicant must be a resident Indian under the provisions of the Income Tax Act for the entire previous financial year.
Tax Liability: The aggregate income, inclusive of interest must not exceed the exemption limit from income tax for senior citizens.
Additional Conditions: Like Form 15G, the taxpayer should not have paid any income tax by way of advance tax during the previous year, showing total income is less than the basic exemption limit and interest should fall within the category of non-deduction of TDS.
When and How to Fill Form 15G/H?
Knowing when to use Form 15G and Form 15H, along with how to fill them up correctly, will be very useful in the management of tax liabilities. Essentially, these forms are used for ensuring that TDS is not deducted from the income under certain conditions. Here's a breakup of the applicable situations and the step-by-step process of filling up these forms.
Applicable Situations
Interest from Bank Deposits: If interest from bank fixed deposits, recurring deposits, or savings accounts goes well over the threshold amount, these forms can be utilized to avoid TDS if a person satisfies the eligibility criteria.
EPF Withdrawals: In case of EPF withdrawals made before a continuous service period of 5 years, TDS applies in case the withdrawable amount is above INR 50,000. Also, if the total income does not exceed the taxable limit after the inclusion of the withdrawal, one can avoid TDS by submitting Form 15G, or Form 15H in the case of senior citizens.
Corporate Bonds and Debentures: If interest income from corporate bonds is more than the specified limit, TDS will be deducted on the same. The eligible investors can furnish these forms to avoid TDS.
Post Office Deposits: Interest from various post office saving schemes would also fall under TDS. TDS can be avoided in such cases using Form 15G or Form 15H, similar to bank deposits.
How to Fill Form 15G/H? Step-by-Step Process
To fill and submit Form 15G/H, following steps should be followed:
Step 1: Personal Information
Name and PAN: Fill in your full name as registered with the Income Tax Department and your PAN (Permanent Account Number).
Step 2: Status and Previous Year Tax Details
Status: (Individual or HUF): Mention whether you have filed as an individual or as a Hindu Undivided Family.
Previous Year Tax Liability: State that you have no tax liability from the previous year, and you are not likely to pay tax in the current year.
Step 3: Declaration and Submission Dates
Financial Year: Mention the financial year for which you are submitting Form 15G/H.
Estimated Income for which Declaration is Made: Total Estimated Income against which declaration is made.
Declaration Filed Income Details: Mention the details of the income for which form is being filed, say, interest income from FDs or RDs.
Step 4: Submission to the Deductor
Once filled, submit the form to the deductor, for example, bank or post office well in advance before the interest gets credited to your account. Only then would it ensure that no TDS deduction on that financial year takes place.
Benefits of Filing Form 15G and Form 15H
Filing Form 15G/H offers several benefits, specifically for those who would have been through unnecessary TDS deductions. However, following are the detailed benefits of Form 15G/H:
Avoidance of Unnecessary TDS
Managing Cash Flows:
Immediate Financial Benefit: Although helped by preventing upfront tax deduction on interest income, Form 15G and Form 15H ensure that there is no liquidity loss to you. This is equally important for people who use interest income for regular expenditure. Rather than awaiting a tax refund at the end of the financial year, the full amount of interest income, in such cases, can be used when needed the most by eligible individuals and senior citizens.
Less Hassle: It saves you from the hassle and time involved in seeking a tax refund from the Income Tax Department. Refund processes do take some time and may need additional documentation and follow-ups.
Streamlining Income Tax Process
Simplification of Tax Filings:
Fewer Complications: In cases where the total income is below the taxable limit, these forms make filing taxes very easy. No tax at source implies that the process of filing income tax returns is very simple with fewer entries and less cumbersome documentation.
Proper Record-Keeping: One is in a position to maintain more accurate tax records since the income that would have been subjected to TDS is correctly reported and not deducted. This will reflect more accurately in your yearly tax returns. The avoidance of mismatch between income reported and the taxes paid avoids notices from the tax authorities.
Tax Planning:
Effective Tax Planning: Use Form 15G and Form 15H as part of your tax planning strategy for the year, and make optimum use of your tax liability by ensuring that you don't end up paying tax at source on income that is otherwise exempt. This will aid in better management and planning of your hard-earned money throughout the year.
Compliance Ease:
Ensures Compliance: By filing these forms in a timely manner, one is ensuring compliance with tax laws, thereby avoiding penalties for non-compliance that may arise due to incorrect TDS deductions.
Filing Form 15G/H: Common Mistakes to Avoid
If you have interest or dividend income that does not exceed the taxable limit, Form 15G or Form 15H will prove to be of substantial assistance in managing your tax liabilities. Still, errors in filling or filing these forms may cause complications, such as tax notices or withheld refunds. Here are the typical mistakes one could make with respect to using Form 15G and Form 15H:
Not Meeting Eligibility Requirements
Error: The form submitted is ineligible, as the criteria of income and age have not been actually satisfied.
Consequence: If it is proved after the submission of the form that he was not eligible, then the deductions might be applicable, and he may also face penalties or notices from the tax department.
Prevention: Check the eligibility criteria and provisions against the age and income of the individual before choosing the form for submission.
Incorrect or Partial information
Error: Filling in the wrong personal details, such as that of the PAN number, or not filling the necessary fields.
Consequence: Wrong information might end up in your form being rejected or your tax files being processed in some inappropriate manner.
Prevention: Once you have filled all the entries, cross-verify it, mainly PAN, the details of income and tax details of the previous year, before submission of the form.
Not Knowing the Applicability of the Forms
Error: Submission of Form 15G or Form 15H for income of a class for which these forms cannot be used.
Consequence: Such misuse of the form for the wrong type of income, say, salary or professional fees may create problems with the IT department.
Prevention: Know that these forms are mainly for fixed deposits, EPF withdrawals before 5 years, and similar types of interest or dividend income.
Outdated Forms
Error: Filing an obsolete version of the form.
Consequence: The form can get rejected, and the exercise has to be repeated with the new form.
Prevention: Always download the latest version of the Form 15G or Form 15H from the web portal of Income Tax India, or collect the latest form from the bank or the post office.
Forgot to Submit Form 15G or Form 15H?
If one forgets to submit Form 15G or Form 15H, then TDS might be deducted on the interest income. Here is what can be done:
Immediate Actions
Submit at the earliest: In case interest for the year has not yet been paid, submit the relevant form immediately, Form 15G in case you are below 60 years or an HUF, and Form 15H in case you are a senior citizen above 60 years. This might avoid further TDS on the remaining interest payable during the FY.
Contact the Deductor: Contact your bank or whoever else deducts TDS. Intimate them about the lapse and furnish forms. Many organizations process interest payments quarterly or half-yearly, so you may yet be able to avoid TDS on latter payments.
If TDS is Already Deducted
File for a Refund: If TDS has been deducted and you were eligible to submit Form 15G or Form 15H, then in such a case you would be required to file for a refund while filing your annual income tax returns. You shall attach that TDS information in your tax return and claim a refund of the amount deducted as TDS.
Adjust TDS Against Tax Due: If there is any tax payable on your other income, you can get the unnecessarily deducted TDS adjusted against any tax dues. This shall reduce your net tax liability.
Prevention of Such Situations in the Future
Set up reminders: Do not let this happen to you again. At the beginning of every financial year or at least some days prior to when you are due for renewal or creating new deposits, set up calendar reminders so that your Form 15G or Form 15H gets submitted on time.
Automatic Renewal Agreements: Some banks have facilities whereby you can consent to an auto-renewal of the Form 15G or Form 15H submission every year. You may check with your bank if they have such a facility and enroll in it.
Review Regularly: Because your financial circumstances or income levels may change, review whether you are still eligible to submit Form 15G or Form 15H every year and modify your submissions accordingly.
Filing Form 15G/H: Submission Process
Understanding where and when to submit Form 15G and Form 15H is crucial for ensuring that no tax is deducted at source on your interest income unnecessarily. Here’s a detailed view on the submission process for these forms:
Where to Submit
Banks: Submit Form 15G or Form 15H to the bank where you have your fixed deposits. This is the most common scenario for these submissions. Each branch where you hold a deposit account must receive a copy of the form if you have deposits in multiple branches.
Post Offices: If you have investments in schemes offered by the Indian Postal Service, such as time deposits or senior citizen savings schemes, you will need to submit the forms to the respective post office where the accounts are held.
Other Financial Institutions: For any other interest-bearing instruments like corporate bonds or certain types of debentures where TDS might apply, submit the forms directly to the institutions or through their managing agencies.
Submission Deadline
Timing: These forms should be submitted at the beginning of the financial year or at the time of making the deposit. This will ensure that there is no TDS right from the first interest payment for the year.
Annual Submissions: Form 15G and Form 15H will apply only for one financial year. Hence, you need to submit it annually if you are eligible. Failure in submitting it annually will attract TDS.
Quarterly Considerations: If you miss doing so at the beginning of the year, these forms should be submitted before the next interest accrual period. Banks typically compute TDS on interest payments on a quarterly basis: end of June, September, December, and March. Submitting prior to these months will help avoid TDS for subsequent interest payments.
Download Form 15G/H
Download Form 15G from here.
Download Form 15H from here.
FAQ
Q1. What are Form 15G and Form 15H?
Form 15G and Form 15H are used to prevent banks and other financial institutions from deducting tax at source (TDS) on interest income when your total income is below the taxable limit.
Q2. Who is required to furnish Form 15G?
Form 15G shall be furnished by an individual, who is less than 60 years of age or Hindu Undivided Families (HUFs) whose total income does not exceed the basic exemption limit.
Q3. Who can file form 15H?
Form 15H is for senior citizens above 60 years whose total income is less than the basic exemption limit for senior citizens.
Q4. Can an NRI file Form 15G or Form 15H?
No, NRIs cannot file Form 15G or 15H. These forms are only for residents
Q5. Where to submit Form 15G or Form 15H?
You have to submit Forms 15G and 15H to all those banks, post offices, or financial institutions with whom you have deposits generating interest income.
Q6. When to submit Form 15G or Form 15H?
Ideally, these forms must be submitted at the start of the financial year or at the time of opening a new fixed deposit or renewing an old one to ensure TDS is not deducted.
Q7. In case I fail to submit Form 15G or Form 15H, what will happen?
If eligible forms are not submitted, TDS will be deducted from your interest income. You would need to claim a refund for this TDS by filing your income tax return in case your total income is below the taxable limit.
Q8. Is it necessary to submit these forms every year?
Yes, Form 15G and Form 15H are valid for a single financial year. So you need to furnish it every year if you continue to satisfy the eligibility criteria.
Q9. What kind of incomes are covered by Form 15G or Form 15H?
Form 15G or Form 15H include interest income from fixed deposits from banks, post office savings and recurring deposits, corporate bonds and incomes from provident funds, if withdrawn before five years.
Q10. Can I submit Form 15G or Form 15H electronically?
Yes, almost all banks and financial institutions have facilities to allow the electronic submission of Form 15G and Form 15H through the online banking portal.
