If you or your family members have fixed deposits or recurring deposits in banks, you must have heard the terms ‘Form 15G’ and ‘Form 15H’ often. Banks usually ask you to fill it while opening a fixed or recurring deposit account so that you can avoid TDS at the time of maturity. If you fail to do so, they even give you a reminder before maturity to ensure minimal tax deduction.
The various ways in which the government offers us exemptions are basically to boost spending and investments towards collective economic growth at a macro level. So, how exactly will these forms help you save money, and where else are they applicable? Let’s try to understand in detail.
What is Form 15G?
Subject to certain conditions, you can avoid TDS (Tax Deducted at Source) deduction on income from interest by submitting Form 15G if you are below 60 years of age. Having a PAN is mandatory for this submission. You can also submit this form online through the websites of some banks. It is valid only for a single financial year. You have to submit it every year to ensure non-deduction of TDS.
What is Form 15H?
Form 15H is the exact same provision for people above 60 years of age.
Who’s eligible for form 15G?
- To be eligible for form 15G, you must be less than 60 years of age.
- Your income must be below the taxable limit to fill form 15G.
- Individuals, Hindu undivided families (HUF), and trusts are eligible for form 15G.
Purposes for which Form 15G or Form 15H can be submitted
The major reason behind submitting these forms to banks is that TDS is not deducted on interest. However, you can also submit these forms to ensure that the TDS is not deducted on EPF withdrawal, income from corporate bank, post office deposits, rent and insurance commission.
What are the conditions required for submitting Form 15G?
- Firstly, you must be an individual or HUF (Hindu Undivided Family).
- You must not be more than 60 years old.
- You must be a resident Indian.
- The total tax applicable on your entire income must be zero.
- Your total income from interest for the financial year must be lesser than the basic limit of exemption applicable to you in that year (currently, Rs 2.5 lakhs).
What are the conditions required for submitting Form 15H?
- Firstly, you must be an individual, not a firm or company.
- You must be a resident Indian.
- You must be a senior citizen or must be turning 60 in the relevant year.
- The tax applicable on your entire income must be zero.
What if you forget to submit the form at the time of opening your deposit account?
Although it is super convenient, many people still don’t remember to submit the form. If you do, your bank might or not might not have deducted TDS already by now. This cannot be claimed from the bank as it has already been deposited with the IT Department by the bank. You can claim it as refund while filing your IT returns at the end of the financial year.
Mostly, banks deduct TDS on a quarterly basis. Check with your bank about this. Even if you submit the form in the middle of the year, the bank won’t deduct TDS for the rest of the year. The amount already deducted will have to be claimed as refund while filing returns.
Where else can you use Form 15G/15H?
Subject to fulfillment of the conditions mentioned above, these forms could also be used to avoid TDS in the following conditions
If EPF balance is withdrawn before five continuous years of employment, TDS is applicable. You can avoid this with Form 15G/15H.
Income from corporate bonds
If income from corporate bonds exceeds Rs.5000, TDS is applicable. You can avoid it with Form 15G/15H.
Post office deposits
Digitized post offices deduct TDS on deposits, and will accept the two forms for non-deduction of the same.
If your rent received exceeds Rs. 2.4 lakh/year, TDS is applicable. You can ask the tenant to not deduct it by submitting Form 15G/15H.
If insurance commission is more than Rs 15000/year, it is TDS deductible. Insurance agents could avoid deduction by submitting Form 15G or Form 15H.
Important Information for Deductors
In case you are a TDS deductor, the Income Tax Act requires you to allot a Unique Identification Number or UIN to everyone who submits a Form 15G/Form 15H. It is advisable that you must file a statement of Form 15G or 15H on a quarterly basis in order to retain these forms for 7 years.
Making yourself aware of the multiple ways in which you can save tax and increase your purchasing power is important. Filling out such forms can also come in handy with other financial needs like loan application. Fortunately, with online platforms like Finserv MARKETS, it is now easier than ever to get your hands on a loan with minimal documentation. The application process for Personal Loan, available on Finserv MARKETS is instant- and when we say instant, we mean approval in 3 minutes and disbursal in 24 hours. Interest rates start from 12.99% p.a. There is no requirement of a guarantee or collateral.
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