Why Form 15G and 15H need to submit to the Bank for Fixed Deposits

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

 

What can you do to make sure bank does not deduct TDS on interest, if your total income is not taxable?

Banks have to deduct TDS when interest income is more than Rs.10,000 in a year. The bank includes deposits held in all its branches to calculate this limit. But if your total income is below the taxable limit, you can submit Form 15G and Form 15H to the bank requesting them not to deduct any TDS on your interest.

What is Form 15G and Form 15H?

Form 15G and Form 15H are forms you can submit to make sure TDS is not deducted on your income if you meet the conditions mentioned below. Also, you must have a PAN before applying for these forms. Some banks allow these forms to be submitted online through the bank’s website.

Form 15H is for senior citizens, those who are 60 years or older; while Form 15G is for everybody else.

Form 15G and Form 15H are valid for one financial year. So you have to submit these forms every year if you are eligible. Submitting them as soon as the financial year starts will ensure the bank does not deduct any TDS on your interest income.

Conditions you must fulfill to submit Form 15G:

1. You are an individual or HUF
2. You must be a Resident Indian
3. You should be less than 60 years old
4. Tax calculated on your Total Income is nil
5. The total interest income for the year is less than the minimum exemption limit of that year, which is Rs 2,50,000 for financial year 2015-16. (Limit is Rs 2.5lakhs for FY 2014-15, FY 2015-16 and FY 2016-17)

Conditions you must fulfill to submit Form 15H:

1. You are an individual
2. You must be a Resident Indian
3. You are 60 years old or will be 60 years old during the year for which you are submitting the form
4. Tax calculated on your Total Income is nil

   Examples to understand who can submit Form 15G and Form 15H

   Income of	Neha	Deepak	Swathi	Rahul
   Age	50 years	21 years	65 years	68 years
   Salary	Rs. 1,80,000	-	-	-
   Pension	-	-	1,00,000	-
   Fixed Deposit interest income	Rs. 85,000	Rs. 2,60,000	Rs. 1,80,000	Rs. 3,30,000
   Total Income before allowing section 80 Deductions	2,65,000	2,60,000	2,80,000	3,30,000
   Deductions under section 80	Rs. 45,000	Rs. 30,000	Rs. 10,000	Rs. 55,000
   Taxable income	Rs. 2,20,000	Rs. 2,30,000	Rs. 2,70,000	Rs. 2,75,000
   Minimum exempt income	Rs. 2,50,000	Rs. 2,50,000	Rs. 3,00,000	Rs. 3,00,000
   Eligible to submit Form 15G	Yes	No	No	No
   Eligible to submit Form 15H	No	No	Yes	Yes
   Explanation	Form 15G can be submitted as age is less than 60 years. Total tax is nil and interest income is less than minimum exempt income.	Form 15G cannot be submitted since interest income is more than minimum exempt income.	Form 15H can be submitted if age is more than 60 years and tax calculated on total income is nil.	Form 15H can be submitted as age is more than 60 years and tax calculated on total income is nil. Form 15H can be submitted although interest income exceeds minimum exemption limit.

   

    

   Forgot to submit Form 15G and Form 15H

   A lot of taxpayers forget to submit Form 15G and Form 15H timely. In such a situation TDS may already be deducted by the bank.

   What should one do about extra TDS deducted -

   • File your income tax return to claim refund of TDS - The only way to seek a refund of excess TDS deducted is by filing your income tax return. Banks or other deductors cannot refund TDS to you, since they have already deposited it to the income tax department. Income tax department will refund excess TDS, after you file an income tax return.
   
   
   • Submit Form 15G and Form 15H immediately – TDS is usually deducted quarterly. If you forgot to submit Form 15G/Form 15H, don’t worry. Submit it at the earliest available opportunity, so that no TDS is deducted for the remaining financial year.

   Purposes for which Form 15G/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 too where you can submit them.

   • TDS on EPF withdrawal – TDS is deducted on EPF balances if withdrawn before 5 years of continuous service. If you have had less than 5 years of service and plan to withdraw your EPF balance of more than Rs 50,000 (Rs 50,000 effective 1 st June 2016, Rs 30,000 prior to that), you can submit Form 15G/Form15H. However, you must fulfil conditions (listed above) to apply for these forms, i.e. 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 1.8lakhs. 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)
   
   
   

   Important information for Deductors

   If you are a TDS deductor, the income tax act requires that you should allot a UIN (Unique identification number) to all the persons who submit a Form 15G/Form15H. A statement of Form 15G/Form15H must be filed by you on a quarterly. This statement has details of Form 15G and Form 15H submitted and incomes on which no TDS was deducted due to submission of these forms. You must retain these forms for 7 years.

   
   

   • TDS on EPF withdrawal – TDS is deducted on EPF balances if withdrawn before 5 years of continuous service. If you have had less than 5 years of service and plan to withdraw your EPF balance of more than Rs 50,000 (Rs 50,000 effective 1 st June 2016, Rs 30,000 prior to that), you can submit Form 15G/Form15H. However, you must fulfil conditions (listed above) to apply for these forms, i.e. 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.
   • LIC premium receipts - Starting October 2014, if the amount received from a policy is more than Rs 1,00,000 and it is taxable, TDS at 2% shall be deducted by the insurer before making payment. You can submit Form 15G/Form15H to request that no TDS be deducted since tax on your total income is nil.
   • TDS on rent – TDS is deducted on rent if total rental payment in a year exceed Rs 1.8lakhs. 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)
   
   

   Important information for Deductors

   
   

   If you are a TDS deductor, the income tax act requires that you should allot a UIN (Unique identification number) to all the persons who submit a Form 15G/Form15H. A statement of Form 15G/Form15H must be filed by you on a quarterly. This statement has details of Form 15G and Form 15H submitted and incomes on which no TDS was deducted due to submission of these forms. You must retain these forms for 7 years.