Avoid TDS on interest income with Form 15G & 15H

How can you ensure that the bank does not deduct TDS on interest, If your total income is not taxable?

If your overall revenue is less than the taxation cap, you can request that perhaps the bank not deduct any TDS by submitting Form 15G and 15H to the bank.

Under section 194A of the Income Tax Act, banks are obligated to withhold TDS when your interest earned exceeds Rs.40,000 in a year for individuals other than senior citizens (the limit for senior citizens is Rs. 50,000). This limit is calculated by adding deposits held in almost all of the bank's branches.

What is Form 15G & 15H?

Individuals must present Form 15G and Form 15H as self declaration form to their bank, requesting that TDS on interest income not be collected since their income falls below the basic exemption level.

You can also verify to see as in some circumstances these forms are available online straight on the bank's website. The bank requires PAN information for these forms.

FORM 15G FORM 15H
A residential citizen, a HUF, a foundation, or any other assessee, but not a corporation or a firm below 60 years of age. Senior citizen refers to a resident who is 60 years old or older.
Your overall income is tax-free. Your overall income is tax-free.
The entire amount of interest income liable to taxation for the year is less than the basic exemption limitation, which is Rs.2.5 lakh for fiscal year 2020-21. (AY 2021-22)

NOTE : Non-residents are not eligible for the benefits of Forms 15G and 15H.

To further understand who can file Forms 15G and 15H, consider the following example.

Age 21 Years 50 Years 65 Years 68 Years
Wages - Rs. 1,80,000 - -
Pensions - - Rs. 1,00,000 -
Income that is subject to taxation Rs. 2,30,000 Rs. 2,20,000 Rs. 2,70,000 Rs. 2,75,000
Interest from a savings account Rs. 2,60,000 Rs. 85,000 Rs. 1,80,000 Rs. 3,30,000
Minimum income to qualify for tax exemption Rs. 2,50,000 Rs. 2,50,000 Rs. 3,00,000 Rs. 3,00,000
Section 80 deductions Rs. 30,000 Rs. 45,000 Rs. 10,000 Rs. 55,000
Before allowing section 80, annual revenue exemptions Rs. 2,60,000 Rs. 2,65,000 Rs. 2,80,000 Rs. 3,30,000
Less than 60 Years old Yes Yes No No
More than 60 years old No No Yes Yes
Eligible to file form 15G No Yes No No
Eligible to file form 15H No No Yes Yes
Tax on total income is Nil Yes Yes Yes Yes
Interest income falls below the basic exemption barrier. No Yes N.A. N.A.
Submission of the form Cannot Submit Form 15G Form 15H Form 15H

Important considerations

  • A senior citizen is eligible to file Form 15H since he levies no taxes.
  • Non-residents can utilize Forms 15G and 15H as they're only for residents.
  • Only form 15G but not form 15H are subject to the condition of interest income exceeding the basic exemption threshold. Senior citizens can file Form 15H even if their interest income surpasses the basic tax exemption level, as long as their taxable income (after deductions) is less than the exemption limit.
  • An individual is unable to file Form 15G since his interest income exceeds the basic exemption level, despite the fact that his overall income is tax-free.

Right time to submit Form 15G & 15H

Forms 15G and 15H are only valid for a single fiscal year. As a result, feel free to share these documents each year at the start of the fiscal year. This will ensure that no TDS is deducted from your interest income by the bank.

Missed to turn in Form 15G or Form 15H?

To claim a TDS refund, file your income tax return as follows:

TDS cannot be refunded by banks or other deductors because it has already been deposited to the income tax department. The only way to get a reimbursement for extra TDS is to file an income tax return. After you file your income tax return, the income tax department will repay any surplus TDS.

Submission of Forms 15G and 15H as fast as possible:

TDS is deducted by most banks every quarterly. Don't stress if you fail to submit Form 15G or Form 15H. So that no TDS is charged for the remainder of the fiscal year, submit it as quickly as possible.

Apart from banks, where can you submit Form 15G or Form 15H?

  • TDS on rented property : TDS is deducted from rents that surpass Rs 2.4 lakh per year. You can file Form 15G or Form 15H to request that the tenancy not withhold TDS if your gross pay is tax-free (applicable from 1 April 2019).
  • Premium receivables from the Life Insurance Corporation : TDS is 5% on the amount of income combining the profits paid or payable upon maturity as of September 1, 2019. TDS will be charged at a rate of 20% if somehow the deductee's PAN data are not submitted to the LIC companies. Considering your gross pay is tax-free, you can propose that no TDS be deducted utilizing Form 15G/Form 15H.
  • TDS on a withdrawal from the EPF : You must file Form 15G or Form 15H if you have worked under 5 years and seek to withdraw an EPF amount of more than Rs.50,000. To apply for these forms, however, you must meet certain requirements. It means that you should pay no tax on your overall income, including any released EPF balance.
  • TDS on deposits at the post office : TDS is deducted at digitized post offices, and Form 15G or Form 15H is accepted if the standards for presenting them are fulfilled.
  • Insurance Commission's TDS : If the insurance commission crosses Rs 15000 per financial year, TDS is levied. Nonetheless, if the tax on their overall revenue is zero, insurance brokers can prepare Form 15G/Form 15H to request a TDS exemption.
  • TDS on corporate bond payouts : If you earn more than Rs 5,000 through corporate bonds, TDS is withheld from your earnings. You can request that TDS not be deducted by submitting Form 15G or Form 15H to the issuer.
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