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What is Form 15G and 15H in Income Tax?

Forms 15G and 15H let you bypass upfront TDS deductions if your total income is below the exemption limit. You can also choose Form 15H for senior citizens, which serves the same purpose.

  • 2,044 Views | Updated on: Mar 21, 2024

Forms 15G and 15H are important documents in income tax used to avoid tax deduction at source (TDS) on interest income. They are self-declaration forms submitted to the bank or other payer requesting them not to deduct TDS on your interest earnings.

If you are an eligible Indian citizen and your total taxable income for the current financial year is below the basic exemption limit, you can claim exemption from TDS deduction on your interest income. This is where Forms 15G and 15H come into play.

What is Form 15G/15H?

Imagine a scenario where you earn interest on your Fixed Deposit (FD) with a bank. Traditionally, the bank would deduct tax on this interest income before crediting it to your account. This is TDS in action – a process to collect tax at the source of income. It applies to various income streams like salaries, FD interest, dividends, and even rent. Form 15G AND 15H are two important forms that help save tax deduced on the source.

Form 15G allows claiming exemption from TDS (tax deducted at source) on your passive income, like interest from term deposits or rental income. Like Form 15G, Form 15H helps you declare your income is below the limit and request non-deduction of TDS on interest income. Form 15H is for senior citizens aged 60 and above.

Benefits of Form 15G and 15H

Forms 15G and 15H offer several benefits:

Prevents TDS Deduction on Interest Income

Both forms are self-declarations submitted to a bank or payer to request them not to deduct tax at source (TDS) on your interest income. This is beneficial if your total annual income falls below the basic exemption limit (currently ₹2.5 lakhs).

Improves Liquidity

Without a TDS deduction, you receive the full interest amount upfront, enhancing your cash flow and liquidity. This can help manage expenses, investments, or other financial needs.

Reduces Paperwork and Refund Hassle

Filing these forms eliminates the need to claim a refund later if TDS was deducted. This saves you time and paperwork associated with filing an income tax return for the only purpose of claiming a refund.

How to Fill Form 15G and 15H?

You can easily download and fill out Form 15G, available on the websites of most major Indian banks. The official website of the Income Tax Department offers Form 15H for seniors (above 60).

Download

  • Major Banks: Head to your bank’s website and search for “Form 15G”. Most banks offer free downloads.
  • Income Tax Department: If you are above 60, download Form 15H from the Income Tax Department website.

Filling

Follow these simple steps to fill out the forms:

  • Step 1: Enter your name, status (individual or HUF), current financial year, and residential status.
  • Step 2: Provide your address, PIN code, email address, and phone number.
  • Step 3: Did your income exceed the taxable limit in any of the past six years? Answer yes/no.
  • Step 4: Fill out the year of Taxable Income (if yes). If you answered yes, mention the year your income crossed the threshold.
  • Step 5: Specify the total income for which you want to avoid TDS deduction (interest income, etc.).
  • Step 6: Calculate your total yearly income from all sources (salary, interest, etc.).
  • Step 7: Mention the number of Form 15G declarations submitted in the previous year (if any).
  • Step 8: Enter the total income reported on those forms.
  • Step 9: List the income sources (fixed deposit account number, recurring deposit details, etc.) for which you claim exemption.
  • Step 10: Indicate your authority if signing on behalf of a Hindu Undivided Family (HUF) or Association of Persons (AOP).

Penalties and Risks for False Declarations on Form 15G

Submitting Form 15G with false information to avoid tax deductions at source (TDS) on your fixed deposit interest income is a serious offense with potentially harsh consequences. Section 277 of the Income Tax Act of 1961 clearly states that making a false declaration on Form 15G to evade TDS is punishable by fine and imprisonment. Penalties include:

  • Major Tax Evasion (> ₹Lakh): If the false declaration aimed to avoid paying more than ₹1 lakh in taxes, you could face imprisonment for 6 months to 7 years, along with a hefty fine.
  • Minor Tax Evasion (≤ ₹1 Lakh): In other cases, the imprisonment term ranges from 3 months to 3 years, accompanied by an appropriate fine.

Way Forward

By understanding and prudently utilizing Forms 15G and 15H, you can seamlessly claim exemption from TDS and maximize your returns on your fixed deposits. Remember, responsible financial management starts with accurate information and compliance. Do not miss out on this opportunity to simplify your taxes and boost your financial well-being.

Key Takeaways

  • If your income is below the limit (₹2.5L), Forms 15G & 15H can help you avoid tax deductions on your FD interest.
  • Form 15G is available for all ages. You can declare income below the limit and avoid TDS on interest and rentals.
  • Form 15H is for senior citizens for the same benefits on interest income.
  • You can get full interest upfront, save time and paperwork, and avoid refund hassles.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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