According to section 194A of the Income Tax Act, banks and NBFCs are required to deduct TDS. It is deducted when an individual's interest income exceeds Rs. 40,000 in a calendar year (the ceiling is Rs. 50,000 for senior persons).
However, if you do not fall into the taxable limit and are looking to avoid paying TDS on your income. You can submit Forms 15G and 15H to the NBFC and ask them not to collect any TDS if your whole income is below the taxable threshold.
What is Form 15G and 15H?
Form 15G and Form 15H are tax saving declarations submitted to banks or financial institution. Individuals can submit them to avoid tax deduction at source (TDS) on interest income earned on certain investments.
Form 15G is a declaration under section 197A of the Income Tax Act, 1961. It can be submitted by individuals below 60 years of age and Hindu Undivided Families (HUF). It ensures that no TDS is deducted on interest income earned on fixed deposits, recurring deposits, or other savings instruments. To be eligible to submit Form 15G, the individual's total income for the financial year should not exceed the basic exemption limit.
Form 15H, is a declaration under section 197A(1C) of the Income Tax Act, 1961. It can be submitted by senior citizens (aged 60 years and above) to ensure that no TDS is deducted from interest income earned on fixed deposits, recurring deposits, or other savings instruments. To be eligible to submit Form 15H, the senior citizen's total income for the financial year should not exceed the basic exemption limit.
It is important to note that the declarations made in these forms should be true and correct, and any false declaration can attract penalties under the Income Tax Act.
Difference between Form 15G and form 15H
Resident Individual, HUF, trust, or any other assessee but not a company or a firm with an age less than 60 years
The total interest income subject for the year is less than the basic exemption limit of that year, which is Rs. 2.5 lakhs for the financial year 2022 - 2023 (AY 2023-2024)
Please note that non-residents cannot claim benefits of Form 15G and 15H.
Benefits of Form 15G and 15H
Here are some benefits of these forms:
TDS exemption: Form 15G and 15H help taxpayers avoid TDS deductions on their interest income. If a taxpayer's income is below the taxable limit. Submitting these forms to their bank or financial institution will prevent TDS from being deducted from the interest earned on deposits.
Cash flow: By submitting these forms, taxpayers can ensure that their interest income is not reduced by TDS. This can help improve their cash flow and financial planning.
No need to file Income Tax Returns (ITR): If a taxpayer's income is below the taxable limit and they have submitted Form 15G or Form 15H. They may not be required to file an income tax return..
Easy process: Filing Form 15G or 15H is a simple process. All you have to do is fill the form and submitting it to the bank or financial institution.
No need to pay penalty: If a taxpayer fails to submit Form 15G or Form 15H, TDS will be deducted from their interest income. In the case of non-filing, a penalty of 1% per month can be imposed on the taxpayer for non-filing or incorrect information.
Note that not everyone is eligible to submit Form 15G or Form 15H. It is important to check the eligibility criteria before submitting these forms to avoid any penalties or other consequences.
Where to submit forms 15G and 15H?
If you want to submit these forms, here is a step-by-step guide for the same.
Step 1: Fill out the form with your personal details, including your name, PAN, address, and other relevant information.
Step 2: Attach a self-attested copy of your PAN card with the form.
Step 3: Submit the form to your bank or financial institution before the beginning of the financial year (April 1) for which you are claiming exemption from TDS.
It is important to note that the eligibility criteria for submitting Form 15G or 15H are different for both forms. Form 15G is meant for individuals below the age of 60, whereas Form 15H is meant for individuals above the age of 60. Make sure you meet the eligibility criteria before submitting the form.
Forgot to submit Form 15G or Form 15H?
If you forgot to submit Form 15G or Form 15H, you can still avoid TDS deduction on your interest income. Here are two options:
- Submit Form 15G or Form 15H at the earliest: Once you submit the form, the deductor will stop deducting TDS from your interest income.:
- File income tax return: File your income tax return (ITR) and claim a refund of the TDS that has already been deducted. When you file your ITR, you will need to provide the details of the TDS that has been deducted from your interest income. If your total income is less than the exemption limit, you will be eligible for a refund of the TDS.
Where can you submit Form 15G or Form 15H?
Apart from banks, you can submit Form 15G or Form 15H to other financial institutions such as post offices, cooperative banks, and companies that are responsible for deducting TDS from your investment income. In addition, many of these institutions now offer the option to submit these forms online through their websites or mobile apps, which can save you time and hassle.
If you have invested in Bajaj Finance Fixed Deposit, you can submit forms 15G and 15H to save TDS deduction.
Some of the features of Bajaj Finance FD are:
up to 8.60% p.a.
Min- Rs. 15,000
Easy online paperless process
Online payment options
Net banking and UPI
Use the Bajaj Finserv customer portal to save your TDS on Fixed Deposits if eligible.
How to Fill Form 15G Online?
Here are the steps on how to fill Form 15G online:
- Go to the Income Tax Department website and click on the "Forms" tab.
- Select "Form 15G" and click on the "Download" button.
- Save the form on your computer.
- Open the form and fill in all the required details.
- Attach a copy of your PAN card to the form.
- Submit the form online by clicking on the "Submit" button.
Here are the details that you need to fill in Form 15G:
- Name of the declarant: Enter your full name as it appears on your PAN card.
- PAN: Enter your 10-digit PAN number.
- Status: Select your income tax status from the drop-down list.
- Previous year: Enter the financial year for which you are submitting the form.
- Residential status: Select your residential status from the drop-down list.
- Address: Enter your complete address, including your city, state, and PIN code.
- Email ID: Enter your valid email ID.
- Phone number: Enter your valid phone number.
- Estimated income: Enter your estimated income for the financial year.
Once you have filled in all the required details, attach a copy of your PAN card to the form and submit it online.
Things to keep in mind before submitting Form 15G/15H
- Only those who have a valid PAN can submit Form 15G/15H to a financial institute or NBFC. Otherwise, the tax will be withheld at 20%. A copy of the PAN card should be enclosed with the cover letter.
- The person submitting Form 15G/15H should make sure they get an acknowledgement. If a dispute with the financial institute develops, the acknowledgement of the submission of PAN details is helpful.
- According to the updated form, the person must submit the information from Form 15G/15H that they have filed to other financial institutes. This has to be done along with the information regarding the amount of interest income that is specified in these forms.
- Since the person has provided a PAN. The relevant assessing officer will have access to all the information that person has provided to other banks. He/she will be able to identify any inaccurate information that person has provided.
- If it is shown that a person provided false information on these declaration forms, Indian law provides for a minimum three-month sentence in prison.
In conclusion, Form 15G and 15H are important documents that can help individuals avoid TDS deductions on their income. These forms are especially relevant for those who have low taxable income and would like to ensure that their earnings are not subject to excessive taxation. By submitting these forms to the appropriate authorities, individuals can avoid the hassle of claiming back TDS deductions at a later stage.
It is important to note that there are certain conditions that must be met to be eligible to submit Form 15G or 15H. Individuals must ensure that they fulfil these criteria before submitting the forms to avoid any legal implications.
Overall, Form 15G and 15H serve as useful tools for individuals to manage their tax liability and ensure that they are not burdened with TDS deductions. By understanding the nuances of these forms and their eligibility criteria, individuals can make informed decisions and optimise their tax planning strategies.
Know about TDS on Fixed Deposit here.