We receive income through different ways, it can be your Salary, Dividend income from mutual funds or stocks, commission, rent, interest on your Bank Fixed Deposits / Securities etc.,
The providers of these incomes (like your company / bank) can deduct a certain percentage of income as TDS (Tax Deducted at source) based on certain threshold limits.
For example : If the interest on Fixed Deposit exceeds Rs 10,000 in a financial year, your bank will deduct 10% tax before crediting the interest to your bank account.
If you wish to seek non-deduction of tax from certain incomes (like interest on FDs), you need to file a self declaration in Form No. 15G or Form No 15H with your Bank (as per the provisions of Section 197A of the Income-tax Act, 1961).
Does this mean that anyone can submit these forms to avoid Tax? – No, there are certain conditions which need to be met for submitting new Form 15G or 15H.
What is Form No. 15G / Form 15h?
Form 15G and Form 15H are the documents that you can submit to make sure TDS is not deducted from your income. You must have a PAN to furnish these forms. Form 15H is for senior citizens (those who are 60 years or older) and Form 15G is for everybody else.
Who can submit Form 15G?
Tax payers who meet below conditions can file Form 15G with their tax deductors ;
- Any Resident Indian (or HUF) who is below 60 years of age and
- If your tax liability for the concerned Financial Year should be ‘NIL’ and
- If total interest income for which Form 15G is being submitted, is less than basic exemption limit (i.e., Rs 2.5 Lakh for FY 2017-18). For example : If your salary income is Rs 1 Lakh and interest income is Rs 3 Lakh and your tax deductions u/s 80C is Rs 1.5 Lakh then you can not submit Form 15G. Here, your interest income is Rs 3 Lakh which is above the basic exemption limit.
Who can submit Form 15H?
Tax payers who meet below conditions can file Form 15H with their tax deductors ;
- Any Resident Indian who is 60 years old or will be 60 years old during the financial year and
- If taxable income (after claiming tax deductions) is less than the basic exemption limit.
When to submit Form 15G / Form 15H?
Most of the tax payers have lot of queries on the submission process of these forms, some of the most frequently asked questions are;
- When to submit Form 15G/15H to tax deductor / income provider (like Bank)? Is it at the beginning of every financial year?
- If I open multiple fixed deposits with the same bank, do I need to file multiple Forms?
- Do I need to submit fresh Form 15G / Form 15H, in case there is a change in my expected income for the concerned Financial year?
The CBDT (Central Board of Direct Taxes) have recently issued a notification and has provided clarifications on these FAQs. (Click on the below image to download the notification.)
We can infer below points based on the notification ;
When to submit Form 15G or Form 15H?
- You can submit Form 15G / 15H to your income provider before the first payment in a year becomes due. It can be at the beginning of the year or during the financial year.
- Example 1 : You have booked a cumulative bank Fixed Deposit for 1 year, interest income is payable on maturity date only. You can submit Form 15G/H with your banker at the beginning of the FY or anytime, before the FD matures.
- Example 2 : You have booked a bank FD where interest income is payable on a quarterly basis. In this case, you have to submit Form 15G/15H at any time before the end of 1st quarter in which such interest income is payable to you. Kindly note that you need not submit Forms again for the remaining quarters of that FY.
Change in Estimated income in a FY
- You have to declare your estimated income for the concerned FY when you are filling the New Form 15H/15G.
- After filing these forms, in case you expect that your income is going change in the FY then you need to file Form 15G/15H again with your income providers.
- For Example : While filing Form 15G/15H to bank, you have mentioned only interest income from Bank FDs as your estimated total income. However, during the financial year, if you let out house property and start earning rental income then you need to submit new Form 15G/15H to your bank (even if you do not make any fresh investments..)
- So, it is has been clarified that new Form 15G/15H has to be filed in every situation where the estimated total income of taxpayers change.
New Investments with the same Entity
- For any new investment you make, even if it is with the same entity, you need to file new Form 15G/H. The reason being, your estimated income for that FY changes.
- Another important clarification is, every time you file a New Form 15G/15H, you need to make sure that you provide total number of earlier declarations along with aggregate amount of income for which such Form 15G/15H have been filled. This will enable the income provider (tax deductor) to ascertain, whether the Forms can be accepted.
- For example : During the financial year, you open two new fixed deposit accounts but with same bank (one FD in the first half of the year and the second one in later half of the FY). In this case, you need to first submit relevant Form to your bank, while opening the first FD account. When you open the second FD account then you need to file new Form 15G/H providing particulars of the same with your bank. However, in case of first FD account (old investment), you need to re-submit new Form 15G/H by just mentioning the total number of earlier declarations filed and aggregate amount of income for which the forms have been filed, in respective columns.
Multiple investments with multiple Entities
- In case, you receive income from multiple entities then you need to submit Forms to all such income providers.
- For example : During the financial year, if you open two FD accounts with two Banks then you are required to submit Form 15G/15H to both the banks separately, in order to avoid TDS.
Most of the income providers (especially the banks) do accept filing of Form 15G / 15H through online mode. In case, you are eligible to submit Form 15H / 15G but fail to do so then you can file your Income Tax Return (ITR) and claim REFUND of TDS. Kindly make sure you do not misuse these forms. (A false or wrong submission of form 15G or form 15H would attract penalty or imprisonment up to 2 years under section 77 of the Income Tax Act.)
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(Post first published on : 15-June-2017)