If your total income falls below the taxable limit and you are wondering how to avoid 10% Tax Deducted at Source or TDS on interest income, you must submit Form 15G or 15H. People with an annual interest income of less than Rs. 40,000 or Rs. 50,000 can file any of these forms to inform the Income Tax (IT) Department about TDS exemption.
Now, you must be wondering which form to file out of these two. To clarify your doubts, here is a detailed explanation of both.
What is Form 15G?
15G Form is a self-declaration document that individuals below 60 years, a trust, or a Hindu Undivided Family (HUF) can file to receive TDS exemption.
What is TDS?
All financial institutions must deduct 10% tax at source when paying interest. The basic TDS exemption limit for the persons mentioned above is Rs. 40000 annually.
To avail of this deduction, individuals and other mentioned entities can fill out and submit Form 15G to their concerned bank/s from which they earn interest.
What is Form 15H?
This self-declaration form is only applicable to individuals aged over 60 years or senior citizens. This is because the TDS exemption limit for senior citizens is Rs. 50,000.
Therefore, if your total interest income in a year adds up to less than Rs. 50,000, you can fill out and submit Form 15H to earn interest without tax deducted at source.
However, there’s more to it.
Who is Eligible to File Form 15G and Form 15H?
You must have developed a basic idea from the above explanation on the different requirements for Form 15G and 15H. However, there are a few more things to consider before filling in one of these forms.
Eligibility criteria for Form 15G
Individuals must have both annual taxable income and total interest income below the exemption limit of Rs. 2.5 lakh.
For instance, suppose there’s a 32-year old individual with Rs. 2.8 lakh annual income and Rs. 20,000 annual interest income. He cannot use this form despite interest earnings lower than the exemption limit of Rs. 40000 because his annual income exceeds Rs. 2.5 lakh.
Conversely, if his interest income was Rs. 80000, but his annual taxable earnings amounted to Rs. 2.4 lakh, he’d be eligible to file Form 15G. However, if a person’s annual interest income is more than the taxable limit of Rs. 2.5 lakh, they’d not be eligible to file this form, irrespective of their annual taxable income.
Besides, individuals can use Form 15G for PF withdrawal of more than Rs. 50,000 if the service period is less than 5 years. They can also use this form for other cases involving TDS, such as post-office deposits of over Rs. 10,000, dividend incomes exceeding Rs. 5000, and annual rental income of more than Rs. 2.4 lakh, given they satisfy the conditions mentioned above.
Eligibility criteria for Form 15H
Individuals above the age of 60 can have interest income exceeding the tax exemption limit of Rs. 3 lakh, given their annual taxable earnings after deduction, is below that. At the same time, their income for the previous year must have remained below the taxable limit.
For instance, a 71-year old individual with Rs. 2.65 lakh annual income and Rs. 3.2 lakh interest earnings a year can submit Form 15H. However, a person is not eligible to submit Form 15H if their taxable income after deduction is above Rs. 3 lakh even though their annual interest earnings are below Rs. 50000.
How to Fill Form 15G and 15H?
If you are unaware of the detailed filling procedure, here is a step-by-step guide.
- Visit your concerned bank’s official website to download Form 15G or 15H.
- Part-1 of this form comprises the taxpayer’s declaration under Section 197A (1) and (1A) under the Income Tax Act.
- Fill this part with details such as your name, employment status, PAN, address, and contact information.
- Also, check the box for “Whether assessed to tax under the Income-tax Act” if your income ever crossed the taxable limit in the past 6 years. Mention the assessment year.
Provide other necessary information and sign the form.
How to Submit Each Form?
Individuals can submit these forms to their respective bank branches offline. You can also avail of the online process as follows.
- Log in to your account on your concerned bank’s website.
- Navigate to the “e-Services” tab and select “Form 15G/Form 15H”.
- Select your CIF number on the new tab and hit “Submit”.
- Select the bank’s branch code, where you want to submit your form and select “Submit”.
- Cross-check the details of your filled Form 15G/15H displayed on the next screen, and click on “Confirm”.
- Now, enter the OTP received on your mobile number and hit “Confirm”.
You will receive a UIN number, which will be downloadable after successful submission.
Now that we’ve discussed everything concerning Form 15G and 15H, let’s summarise their differences with a table.
Difference between Form 15G and Form 15H
|Parameters||Form 15G||Form 15H|
|Status||Individuals, HUF, and trusts||Only individuals|
|Age of individuals||Below 60 years||60 years and above|
|Total income limit||Rs. 2.5 lakh per annum||Rs. 5 lakh for those aged 80 years and above, and Rs. 3 lakh for others|
|FD interest income limit||Rs. 40,000||Rs. 50,000|
Note that in both cases, individuals must submit the application form to all branches of a financial intuition from which they are receiving income. Also, make sure to complete submission before the transfer of the first interest. This way, you can prevent tax deduction right from the beginning and would not need to wait for a refund after IT filing.
Whichever form you submit, note that a false declaration may result in imprisonment. Therefore, make sure you understand the differences between the two. Meet the mentioned criteria before utilizing Form 15H or Form 15G for PF, FD, or other investment returns.
Frequently Asked Questions
Can an NRI submit Form 15G or 15H?
No, these forms are only valid for Indian residents.
Where do I need to submit Form 15G for EPF withdrawal?
You can submit the form on the EPFO portal when using it for EPF withdrawal.
Do I need to submit form 15G/15H to the IT department?
You need not submit these forms to the Income Tax department. Only submitting to the bank branches will suffice.
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