15G and 15H for FD - Difference and Benefits

As per the Indian income tax laws, any interest earned above a certain threshold is liable for a TDS deduction. For non-senior citizens, the limit is ₹40,000, whereas for senior citizens it is ₹50,000. 

Banks generally deduct a 10% TDS on interest income if it exceeds these limits. However, if your total income in a financial year does not exceed the basic tax limit, you need to submit Form 15G or 15H. 

These forms are self-declarations that request the bank/NBFC not to deduct TDS on the interest earned on your fixed deposit income. Read on to understand the difference between these forms and more.

Although Form 15G and 15H are fundamentally similar, the key difference lies in who can fill them. Check out some primary differences between them. 

Form 15G is a declaration submitted by non-senior citizen taxpayers requesting financial institutions to not deduct TDS from the interest earned. You must submit the form only if your total income is below the minimum exemption limit.

Features of Form 15G 

The following are the notable features of Form 15G:

• Any individual taxpayer below 60 years of age, a Trust, or a member of the HUF (Hindu Undivided Family) can submit this form

• You can file Form 15G before the interest is payable by the financial institution

• You can file this form only if your total income in a financial year is below the basic taxable limit of ₹2.5 Lakhs

• Only Indian residents can file this form

The function of Form 15H is identical to what Form 15G does. You can file this form to avail a waiver on TDS on the interest income. However, you file this form only if you are a senior citizen, i.e., have reached 60 years of age. 

Features of Form 15H 

Here are some of the features of Form 15H:

• You can only file Form 15H if you are a senior citizen

• To file this form, your total taxable income must be less than the minimum taxable income, i.e., ₹3 Lakhs (₹5 Lakhs for those older than 80 years)

• You need to submit this form to every branch where you have deposits

• Filing this form at the time of the deposit allows you to avoid deductions at the time of maturity of your FD

If your bank deducts TDS from your FD interest, you will have to request a refund while filing ITR. To avoid this, you need to file Form 15G/H, whichever is applicable, before the financial year begins.

For instance, if you are below 60 years of age, you will need to file Form 15G on or before April 1, 2023. Similarly, if you are above 60 years of age, you will need to file Form 15H.  

This will help ensure that the bank or other liable financial institution does not deduct TDS on your fixed deposit interest payments for the financial year 2023-24. 

If you submit these forms late, the financial institution may have already deducted tax on any previous interest payments made during the year. You can then claim a refund for those TDS amounts alone when you file your tax returns.

Here is an example to better understand who can submit Form 15G and Form 15H. The table below shows the income particulars for 4 different income tax assesses.  

To be eligible for submitting Form 15G and 15H, you need to meet the following criteria: 

• Below 60 years (for Form 15G)

• Above 60 years (for Form 15H)

• Indian resident

• Have taxable income below the basic exemption limit

• Have interest income below the basic exemption limit (for Form 15G)

Since these are merely self-declaration forms, you typically need not submit any accompanying documents. However, ensure you provide your PAN details when you open an FD with a bank. 

This is because if you do not submit your PAN details, the bank will deduct tax at 20% instead of the regular 10%. In addition to your PAN, you may also need to submit other details, such as the following:

• Telephone number

• Email ID

• Occupation 

• Complete addresses 

• Details of income from other sources

You need to submit Form 15G or Form 15H at each bank branch with which you have a fixed deposit that pays you interest. The number of copies required can vary from one bank to another. Typically, you may have to submit 3 copies, which are distributed as follows: 

• One copy remains with the bank

• One copy is submitted to the income tax department

• One copy is sealed, stamped and returned to you as an acknowledgement copy

If you submit Form 15G/15H, it essentially means that the bank or the payer does not need to deduct tax from your interest income. It implies that you do not have to claim any tax refunds since no tax is deducted in the first place. 

That said, if the bank or the paying entity has already deducted taxes, you may have to file your ITR and claim the tax refund. 

If you forget to fill and submit Form 15G/H as applicable, the financial institution will deduct TDS from your interest. In that case, here is what you need to do. 

• Submit Form 15G/15H Immediately

The last date for submitting Form 15G and Form 15H is before the financial year ends. So, you can still submit your form and ensure that the institutions do not deduct further tax.

• File your ITR and Claim a Refund

Another option is to file your income tax return within the due date and claim a refund for the tax deducted. Remember that the due date for return filing varies depending on whether you are an individual or other entity. 

To claim a refund, filing your returns one time is crucial. This sums up the primary details of Form 15G and 15H. If you satisfy the conditions required to submit either of these forms, make sure you submit the document on time to avoid tax deduction at source. 

This way, you can earn the entire income without any tax cuts.