Form 15G & Form 15H to Save TDS on Interest

Form 15G & Form 15H are self-declaration forms required to be furnished by the Assessee to his Banker for Nil Deduction/Lower Deduction of TDS on Interest on Fixed Deposit/ Recurring Deposit. As per Section 194A of the Income Tax Act, 1961, all Banks and Financial Institutions have been mandatorily instructed to deduct TDS on all Interest Payments exceeding Rs. 40,000 in any Financial Year. Thus, whenever any customer receives more than Rs. 40,000 as Interest from a Bank, the Bank will have to deduct Tax on such Income arising in the hands of the customer and will directly pay this Tax to the Govt. on the behalf of the customer.

The Banker will issue a TDS Certificate in Form 16A for the TDS so deducted mentioning the details of TDS Payment with the Govt. While filing your Income Tax Return, the Assessee shall furnish the details mentioned in his Form 16A which should be in accordance with the TDS Reflected in Income Tax Form 26AS. Credit of TDS so deducted would be allowed to the taxpayer and adjusted against his Total tax liability for the year.

While framing this Section, a case arose wherein the Interest received on Fixed Deposits/ Recurring Deposit was more than Rs. 40,000 and therefore TDS on Interest had to be deducted, but that person was not liable to pay Income Tax as his Income did not fall in the Taxable Limits as per the Income Tax Slabs.

In such cases, wherein the Tax Liability of the Assessee is Nil and TDS on Interest is liable to be deducted as his Interest Income is more than Rs. 40,000, the assessee can furnish Form 15G/ Form 15H for Nil/ Lower Deduction of TDS.

As per RBI guideline dated 31st May 2013, at the time of submission of Form 15G/15H, the Banker will also issue an acknowledgement to the assessee stating the receipt of the form.

Budget 2015 Update: Earlier the limit of Rs. 10,000 for TDS Deduction was separate for each bank branch. However, as now all bank branch entities are computerized this limit of Rs. 10,000 is now not separate for all bank branches but consolidated for all branches. In other words, this limit of Rs. 10,000 is now not per bank branch but per bank.

Budget 2018 Update: This limit for non-deduction of TDS has been increased to Rs. 50,000 in case of senior citizens.

Form 15G

Form 15G can be submitted by non-senior citizens i.e. individuals who are less than 60 years of age and who satisfy both the criteria mentioned below:-

1. The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil
2. The aggregate of the interest & other incomes received during the financial year should not exceed the basic exemption limit as per the prevalent Income Tax Slabs

The above conditions can be explained with the help of the below mentioned examples:-

Particulars	Mr.X (Age: 46 years)	Mr.Y (Age 55 years)
Interest Income	60,000	3,00,000
(Add) Other Income	1,20,000	0
Total Income before Deductions	1,80,000	3,00,000
(Less) Deductions	(1,00,000)	(1,00,000)
Total Income after Deductions	80,000	2,00,000
Can Form 15G be furnished ?	YES, 15G can be furnished as Total Income before deductions does not exceed the basic exemption limit as per Income Tax Slab Rates	NO, 15G cannot be furnished as Total Income before deductions exceeds the basic exemption limit as per Income Tax Slab Rates

Form 15H

Form 15H can be submitted by senior citizens only i.e. those who are above 60 years of age and satisfy the following criteria:-

1. The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil

The above condition can be explained with the help of an example.

Particulars	Mr.X (Age 61 years)	Mr.Y (Age 63 years)
Interest Income	2,55,000	2,80,000
(Add) Other Income	90,000	1,80,000
Total Income before Deductions	3,45,000	4,60,000
(Less) Deductions	(1,00,000)	(1,00,000)
Total Income after Deductions	2,45,000	3,60,000
Can Form H be furnished?	YES 15H can be furnished as Total Income after deductions is below the amount chargeable to Income Tax as per Slab Rates and final tax payable is NIL	NO 15H cannot be furnished as Total Income after deductions is above the amount chargeable to Income Tax as per Slab Rates and thus, tax would be payable on this income

Submit Form 15G & Form 15H online

The Ministry of Finance vide Notification No. 76/2015/F.No.133/50/2015-TPL dated 29th September 2015 has amended the income tax rules for the submission of Form 15G and Form 15H. These rules have been referred to as the Income Tax (14th Amendment) Rules, 2015 and are applicable from 1st October 2015.

Rule 29C is applicable for submission of Form 15G and Form 15H. An amendment has also been brought in this rule which says that an declaration for Nil/Lower Deduction of TDS on Fixed Deposit/Recurring Deposit may be furnished in any of the following modes

1. Paper Form
2. Electronically after duly verifying through an electronic process in accordance with the procedures, formats and specified standards

As the Rule now permits the submission of Form 15G and Form 15H electronically, taxpayers can now submit the forms online as well. As the Govt has now granted the permission to submit Form 15G and Form 15H online, the whole process is expected to get simpler and hassle free.

Difference between Form 15G and Form 15H

Although both these forms are for Nil/Lower Deduction of TDS on Interest and require that the final tax liability on the estimated income shall be Nil, there are some differences in these forms with respect to their use:-

1. Form 15H is required to be furnished by Senior Citizens who are above the age of 60 years whereas Form 15G is required to be furnished by Individuals other than Senior Citizens
2. Form 15H cannot be furnished by HUF whereas HUF’s can furnish Form 15G
3. Form 15H can be furnished even if the aggregate total income is more than the basic exemption limit as per the Income Tax Slabs but Form 15G can only be furnished if the aggregate income is less than the basic exemption limit

Form 15G and Form 15H are available at all Bank Branches and you can request your Banker for this Form at the Counter. Alternatively, you can submit these forms online as well.

While submitting these forms, the assessee would also be required to disclose the details of Investments like Shares, Debentures, Fixed Deposits, Mutual Funds and other Investments held in the name of the Assessee

Form 15G and Form 15H both have a validity of 1 financial year only. These forms are only valid for the Financial Year in which you have furnished these Forms and in case you want to apply for Nil/ Lower Deduction of TDS on Interest on Fixed Deposit in another financial year, you will have to refurnish these forms again to your Banker.

In case, you have not furnished Form 15G/Form 15H, and the banker has deducted TDS on Interest, there is no need to worry as you can always claim TDS Refund for the TDS Deducted in excess of your Income Tax Liability. The Assessee shall furnish the details of the TDS Deducted as mentioned in Form 16 A to the Income Tax Department while filing the Income Tax Return and the TDS deducted in excess of the Tax Payable shall be refunded to the Assessee with Interest.