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. Taxpayers 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 on the difference between form 15G and form 15H.
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. You can file Form 15G to your bank so as to request them not to deduct TDS on interest income provided your income falls below the total exemption limit.
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.
So, 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 the source.
TDS or Tax Deducted at Source was introduced with the sole aim of collecting tax from the source of income. TDS is imposed on various sources of income, including but not limited to salary, interest earned, and commission received. TDS varies based on the income source.
To avail of TDS deduction, individuals and other mentioned entities can fill out and submit Form 15G to their concerned bank’s from which they earn interest.
Both Form 15G and Form 15H are self-declaration forms that you can submit to claim TDS exemption. It’s valid for individuals who are below 60 years of age and have an income threshold below the taxable limit.
You must have developed a basic idea from the above explanation of the different requirements for Form 15G and 15H. However, there are a few more things to consider before filling in one of these forms.
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 the person’s 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 an annual rental income of more than Rs. 2.4 lakh, given they satisfy the conditions mentioned above.
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.
If you are unaware of the detailed filling procedure, here is a step-by-step guide.
Provide other necessary information and sign the form.
You can submit your Form 15G for PF withdrawal both online – through the EPFO portal and offline – by physically submitting your form to EPFO regional office.
If you want to submit Form 15G for PF online, here’s everything you need to do.
Individuals can submit these forms to their respective bank branches offline. You can also avail of the online process as follows.
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.
|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 the 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.
Any kind of wrong information mentioned in Form 15G or Form 15H can attract penalties under Section 277 of the Income Tax Act, 1961. Individuals making false claims can face imprisonment ranging from 3 months to 2 years along with a fine. If there’s a case of tax evasion exceeding Rs.25 lakh, the term can be extended up to 7 years.
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.
Ans: Some of the primary differences between Form 15G and Form 15H are:
Form 15G is for individuals below 60 years while Form 15H are for those who are 60 years and above
The total income limit for Form 15G is Rs.2.5 lakh p.a., while for Form 15H is Rs.5 lakh for those above 80 years and Rs.3 lakh for others
Form 15G is for individuals, HUFs and trusts, while Form 15H is only for individuals
Ans: Form 15G is a self-declaration form that you can submit to the bank requesting not to deduct TDS on interest income, provided your income is below the tax exemption limit.
Ans: Form 15G is for individuals, HUFs and trusts, while Form 15H is only for individuals.
Ans: No, these forms are only valid for Indian residents.
Ans: You can submit the form on the EPFO portal when using it for EPF withdrawal.
Ans: You need not submit these forms to the Income Tax department. Only submitting to the bank branches will suffice.
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