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Are you in the Zero Income Tax Bracket? Remember to Fill Form 15G

By Finserv MARKETS - Dec 5,2019
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Form 15G: Zero Income Tax Bracket

We all are aware of the dreaded income tax eating away at our salaries but did you know there are several criteria to get deductions?

First, let’s start with what an income tax bracket is. In India, the tax is placed on individual taxpayers in the slab system. This system places different tax rates on different income slabs. The tax rates increase as your income rises.

Second, these tax slabs undergo change yearly when a new fiscal budget is implemented. There are always three categories of individual taxpayers: individuals below the age of 60 years (both residents and non-residents in this case), resident senior citizens between the ages of 60 to 80 years, and resident super senior citizens above the age of 80 years. Each category has income levels falling in the zero income tax bracket.

The zero income tax bracket is when none of your income goes to the government in taxes (this is primarily based on your annual income). For the fiscal year of 2019-20, you fall in the zero income tax slab if your annual salary is below Rs. 2.5 lakhs and if you are younger than 60 years. If you’re in the second or third taxpayer category of 60-80 years or 80+ years of age, it’s 3 lakhs and 5 lakhs respectively to be exempt from the income tax.

A guide to filling the Income Tax Form 15H

Image Source: Economic Times

Now, here comes the important part. We’re all in need of financing and most of this financing comes through loans or fixed deposits at banks. However, many are often unaware that there’s a form you have to fill out when you fall in the zero income tax bracket. This helps you avoid getting taxed on the added cash flow from the interests you’ll earn when the time comes for your deposit withdrawals. The form is called 15G so regardless of whether you fall in a higher income tax bracket, always check with your bank whether you fit the criteria to get exempted from the income tax and having tax amounts deducted from your interests.

Fixed deposit holders must submit form 15G at the start of the financial year to their bank. This helps to avoid tax deducted at source (TDS) on interest payments. Once required conditions for Form 15G are met, filling the form is extremely easy. It has 3 steps: fill the fields in the form, attach your PAN copy with a declaration, and submit the forms to your financier or online. They’re valid for one year and must be submitted every year but you must make sure your financier does not deduct the tax before you submit the forms. Once it’s deducted, say goodbye to that money for good or a while. The bank might refund the money or you get into a lengthy process to file another form and claim the refund.

By being in this income bracket, you also get several tax benefits on loans. Outlined in the Income Tax Act 1961, you are relieved tax payments as a borrower. For instance, the Budget 2019 proposed a higher deduction for the zero-income borrowers to claim for paid interest amounts on loans for affordable housing. On Finserv MARKETS, you can get collateral-free personal loans up to INR 25 lakhs, on which you can reduce your EMIs by 45% with interest-only payments. Your loan will be approved within 5 minutes and disbursed into your account within 24 hours with no hidden charges. The amounts are between INR 1.5 lakhs to INR 3.5 lakhs per annum on houses valued up to INR 45 lakhs, provided the loan is taken up by March 31, 2020. This gives a total benefit of INR 7 lakhs for a loan period of 15 years. Considering the fact that the majority of homeowners are in the low and mid-income segments, the tax benefit will shoot demand up substantially, particularly first time home buyers who benefit from interest subvention. Reduced interest rates help increase eligibility for these income brackets.

Components of Form 15G

The components of Form 15G are divided into two parts, i.e Part A and Part B.

Part A consist of:

  • Name and PAN details.
  • Financial year details.
  • Contact and address details.
  • Income details that include the nature of income and section under which it is deductible.
  • Declaration stating that the details provided are accurate.

Part B consists of:

  • Individual’s name with tax liability.
  • PAN and TAN details.
  • Aadhaar number.
  • Address and contact details.
  • Amount of income paid.

Who can Submit Form 15G?

  • You need to satisfy the following parameters to submit form 15G
  • You must be an Indian citizen
  • You must be less than 60 years of age.
  • You must not fall in the income tax bracket to fill form 15G.
  • Individuals, Hindu undivided families (HUF), and trusts are eligible for form 15G.

Things to Remember while Filling Form 15G

  • Make sure that you are below 60 years of age
  • Ensure that the details are accurate
  • Do not overestimate your income
  • Post submission of the 15G form, make sure that you collect an acknowledgement slip.

Example of Form 15G

Name Rajesh Mahesh
Age 50 Years 25 Years
Salary – Annual 1,80,000 Unemployed
Interest Income from FD 85,000 2,60,000
Income Before Section 80 Deductions 2,65,000 2,60,000
Deductions Under Sec 80 45,000 30,000
Taxable Income 2,20,000 2,30,000
Minimum Exempt Income 2,50,000 2,50,000
Form 15G Yes No

FAQ for Form 15G

  • Is Form 15G required for PF withdrawal?

While withdrawing the PF, if you submit Form 15G, then TDS won’t be deducted. It would imply that your income would not be taxable after receiving payment of your PF accumulations

  • What is estimated income in Form 15G?

The aggregate of the income received from the interest during the financial year should not exceed the basic exemption slab of that assessment year ex: 2.5 lakh in 2018-19, 2019-20

  • What is the purpose of Form 15G?

The most important reason behind submitting the 15G form to banks is that TDS is not deducted on interest. You can also submit this form to ensure that the TDS is not deducted on EPF withdrawal, income from corporate bank, post office deposits, rent and insurance commission.

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So what are you waiting for? Fill the 15G form and make sure that your TDS is not deducted.

On Finserv MARKETS, you can also enjoy these tax benefits on personal loans through interest payment deductions. You can avail personal loans with several other benefits like a smooth hassle-free online process, flexible repayment options, minimal documentation during application. Availing a personal loan available on Finserv MARKETS, comes without any pledging any collateral.

However, personal loans can be a little tricky, where you get tax benefits based on what the loan is being used for. Generally, personal loans are not taxable as the amount is not considered as part of your income when filing tax returns so you don’t need to pay income tax on personal loans. The tax benefits depend on the end use of the loan amount and the Indian Income Tax allows tax deductions on loans for specific purposes such as education, purchasing and renovating your house, business expansion, and buying new assets.

Overall, being in a zero-income tax bracket comes with a host of tax benefits on getting your credit provisions. Once you file Form 15G at the start of the financial year, you can enjoy such benefits on your fixed deposits and interest repayments towards loans for certain number of tenures and across 3 different loan types. By being a part of this bracket, it is good to know that the government is continuing to propose deductions on account of providing affordable housing and education for all, regardless of their annual income. As time moves forward, the Indian market is gearing to provide credit to the whole public, regardless of their income, due to expected projections of higher demands. This allows all income groups access to major rights and privileges that wasn’t all too on the table.

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522