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Form 15G and Form 15H

Banks have to deduct TDS on interest income if such interest is more than INR 40,000 in a year. To calculate this limit, the bank adds all the deposits held in all its branches by the taxpayer. However, if the total income of the taxpayer does not exceed the taxable limit, the taxpayer can submit Form 15G or 15H and request the bank not to deduct any TDS.

Like bank interest, TDS on few other incomes can be avoided. The list is available below.

Did you Know?

As per budget 2019, for bank and post office deposits the threshold on income, to deduct TDS has been raised to INR  40,000 from INR 10,000. However, for NBFCs, the threshold continues to be INR 5000.

In this article, you will find:

What is Form 15G?

Form 15G is a form that can be submitted by any individual who is below 60 years of age, to avoid deduction of TDS on income. However, these below-mentioned conditions need to be fulfilled while submitting the form:

  1. You are a Resident Individual/Hindu Undivided Family/Trust/any other assessee but not a Company/Firm.
  2. Your age is less than 60 years.
  3. The tax liability on your total income is calculated to be nil.
  4. The total income to be earned during the year is not more than the basic exemption limit of that year, I.e., INR 2.5 lakhs for the financial year 2020-21 (AY 2021-22).

What is Form 15H?

To prevent the deduction of TDS on income, Form 15H can be submitted by any individual whose age is 60 years or more. However, the following conditions should be satisfied:

  1. You must be an individual and an Indian Resident.
  2. The tax liability on your total income should be nil.

Basic Exemption Limit for submitting Form 15G/15H

 Type of Taxpayer Details Form Type Basic Exemption Limit
Non-Senior Citizen Indian Resident below 60 years of age Form 15G INR 2,50,000
Senior Citizen Indian Resident who is above 60 years of age, but less than 80 years of age Form 15H INR 5,00,000
Super Senior Citizen Indian Resident who is above 80 years of age Form 15H INR 5,00,000
Others Trust, Association, Club, HUF and Society Form 15G INR 2,50,000

When can you submit Form 15G/15H?

If the taxpayer satisfies the conditions mentioned above, he/she can submit the Form 15G/15H to the deductor for these incomes:

  • Bank and post office deposit interest – As mentioned above, when interest earned from all the branches of a bank or from the post office deposits exceeds INR 40,000 (INR 50,000 in case of senior citizens earning bank interest), TDS will be deductible.
  • EPF withdrawal – If a taxpayer withdraws his/her EPF balance before the completion of 5 years of continuous service and the withdrawal amount exceeds INR 50,000, TDS will be deducted.
  • Income from corporate bonds – If Income from these bonds exceeds INR 5,000 TDS is deductible.
  • Rental income – TDS on rent is applicable when the rent on a single property exceeds INR 2,40,000 in a year.
  • Insurance Commission – When commission received exceeds INR 15,000 per year, TDS is to be deducted.

Form 15G/Form 15H – Submission Process

These forms can be submitted offline in ‘Paper Form’ or electronically.

The taxpayer needs to fill in the details in Form 15G or Form 15H as applicable. Post this, a copy of the PAN card has to be attached along with the declaration form. This form has to be submitted to the tax deductor who will complete the formalities and submit it to the department.

False declaration in these forms can lead to a fine and/or imprisonment up to 2 years under Section 277 of the Income Tax Act, 1961. However, if the evaded taxable amount exceeds INR 25 Lakhs, the term can be extended up to 7 years.

When to submit Form 15G/15H?

Form 15G and 15H must be submitted to the deductor at the beginning of the financial year.  These forms are only valid for one year.

Important

The government has extended the validity of the Form 15G, and Form 15H submitted in FY 2019-20 (which was expiring on 31 March 2020) up to 30 June 2020. That means, for the period between 1 April 2020 and 30 June 2020, the Form 15G and 15H submitted for FY 2019-20 will be considered as a valid proof for non-deduction of TDS. For the FY 2020-21 taxpayers could submit the Form 15G and Form 15H in the first week of July 2020.

Miscellaneous Points

  • In case a of the copy of the PAN card is not submitted to the deductor, then, TDS will be deducted @ 20%.
  • Interest is calculated on an accrual basis and not on payment or due basis.
  • To avoid any inconveniences, a written acknowledgement is usually taken after submitting the Form 15G/15H offline.
  • In case the taxpayer misses to submit form 15/15H, he/she can claim TDS refund only by filing the Income Tax Return on time.