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Form 15G and Form 15H are income tax department forms that help individuals in saving tax obligations. Let’s learn in detail about the functionality of these forms to ensure tax efficiency.
Individuals who receive interest on their bank accounts and deposits fall under the taxable category. If an individual's interest in a financial year is more than ₹40,000, then the bank can deduct TDS or Tax Deductions at Source. However, the maximum limit for senior citizens is ₹50,000.
But what if an individual's taxable income is less than the maximum tax-exempt limit? Then, in that case, an individual can submit Form 15H and Form 15G to avoid a TDS deduction. In addition, individuals can also exempt tax obligations under Section 80C by investing in financial schemes.
Understanding all about Form 15G and Form 15H can help individuals while filing their Income Tax returns. On that note, let's dig deep into Form 15G and Form 15H intricacies.
Table of Content
What are Form 15G and Form 15H?
Both Form 15H and Form 15G are self-declaration forms issued by the income tax department that need to be submitted by individuals to the bank for not deducting tax. These forms are necessary since the individual income is below the basic exemption limit. However, these forms differ from each other in their functionality. Let's understand both in detail.
What is Form 15G?
Form 15G falls under Section 197A of ITA 1961. It is a self-declaration form submitted by individuals below the age group of 60 years to the bank not to deduct TDS on passive income like rental income, term deposit, etc. HUF can also submit this Form. However, to be eligible for the Form 15G TDS deduction exemption, an individual's overall income year should fall below the basic exemption limit.
Suppose the individual income in a financial year is below ₹2,50,000; they are not bound to pay any taxes. But if an individual has other passive income sources such as FD, etc., the bank can deduct TDS before crediting the interest to the bank account. If the total income is under ₹2,50,000, the individual can submit Form 15G to avoid a TDS deduction on interest received even if it crosses the ₹40,000 limit.
What is Form 15H?
Form 15H falls under Section 197A(1C) of ITA 1961. The Form is very similar to form 15G but slightly different. An individual above the age group of 60 submits this self-declaration form. It ensures that no tax is deducted on income or interest earned from FD and other financial instruments in the financial year.
The eligible limit for Form 15h TDS exemption is ₹50,000 for senior citizens. This form is valid for one year, so it must be submitted every financial year to save TDS on interest income.
Differences between Form 15G and Form 15H
These forms 15G and 15H can be submitted to banks to avoid taxation on various incomes and interest from saving income. Let's understand how Form 15G and 15H rules differ in detail.
Parameters |
Form 15H |
Form 15G |
Eligibility |
Resident households who are above 60 years of age can submit Form 15H. |
Resident households who are below 60 years of age can submit Form 15G. |
Condition |
This Form can be submitted to financial institutions even if the income earned from interest crosses the basic exemption limit. |
On the other hand, this Form is submitted only if the interest income is below the basic exemption limit. |
Interest limit |
The interest limit for Form 15H eligible individuals is ₹50,000 in the financial year. |
The interest limit for form 15G is ₹40 000 in the financial year. |
Provision |
This Form falls under Section 197A (1C) if ITA. |
This Form falls under As per Section 197A (1) and (1A). |
Documents Needed |
A PAN card is mandatory for this form submission. |
A PAN card is needed for this Form. |
When to Submit Form 15G & Form 15H?
Resident households and taxpayers can submit Form 15G & Form 15H to have TDS relief in their income from interest. There are multiple scenarios where individuals can submit these forms to seek TDS relaxation, such as:
Rental Income -Under Income Tax Act, the rental income that exceeds the ₹2,40,000 bar is subjected to tax deduction. So, if the individual has a rental income but is below the exemption limit, they are eligible to submit Form 15G & Form 15H.
Post Office Deposits - Another income eligible for tax deduction is post office deposit income. But if the individual falls under any category that supports Form 15G and Form 15H submission, then they can skip the TDS deduction on the same.
Corporate bonds - Investors prefer to invest in corporate bonds to maximise their interest income. And like any other saving income, the interest on this investment is also liable to tax as per the TDS provisions and applicable slab rates. If the income of corporate bonds exceeds the ₹5000 limit in a year, then TDS would be deducted. Individuals can escape the tax liability by submitting Form 15H or Form 15G based on their eligibility criteria.
EPF Withdrawal - Another category which is liable for tax deduction is EPF withdrawal by an employee before the 5 years of continuous service. However, by submitting these forms, individuals can skip the liability of tax deduction on EPF withdrawal of ₹ 50,000.
Dividend income - Further, dividends are liable for tax deductions for interest above ₹5000. But by submitting Form 15G/ 15H, one can avoid TDS deductions.
Life Insurance Receipts - Under the Income Tax Act section 10(10D), an individual's sum or death benefit from a life insurance policy is exempt from any tax deduction. However, it is not tax-free if the amount received exceeds ₹1 Lakh. In that case, individuals can file Form 15G and 15H if the financial year income is below the decided limit.
Insurance Commission - Lastly, for insurance agents, as per the laws, if the commission earned in the financial year exceeds the ₹15,000 limit, then TDS will be applicable. Individuals must submit the form to the insurance corporation to avoid tax deductions if their income is below the limit.
Things to Keep in Mind Before Submitting Form 15G and 15H
The following things should be considered while submitting the Form 15G and 15H.
Individuals can only submit these forms if their income exceeds the tax threshold set for the financial year.
Another thing to keep in mind is that these forms are not a substitute for Income Tax Returns. Individuals need to file ITR separately.
Further, if individuals have submitted the Form and TDS is deducted, the amount can be claimed by filing an ITR.
According to the current income tax rules, NRIs are not eligible for submitting these forms.
A valid PAN card document is required to submit Form 15G and 15H. If you fail to submit a valid PAN card, then instead of deducting tax at regular 10%, the bank will deduct tax at 20%.
As per the new rules, individuals who have submitted forms 15G and 15H must also notify other financial institutions.
In case of any fraudulent submission of forms 15G and 15H from the individual can lead to a penalty under section 277 of ITA.
How to File Form 15G and 15H Online?
Let's detail the process of filing Form 15G and 15H offline.
Step 1: Head to the official income tax website and click on the forms tab.
Step 2: Then, under form tabs, click on Form 15H or Form 15G TDS exemption to download.
Step 3: Fill out all the necessary information, such as PAN number, name, residential address, etc.
Step 4: If you are filling out Form 15G, submit the correct details of the previous financial year's income.
Step 5: If you are filling out Form 15H, ensure to provide details of investments and previous financial income.
Step 6: After completing the forms, fill out the submission date and sign it.
Step 7: Lastly, you need to submit the filled-out forms to banks or financial institutions where you have an FD or savings account.
File Forms 15G and 15H online.
If you want to avoid visiting the bank or financial institution to submit these forms physically, you can submit them online. Let's understand the process of filing forms 15G and 15H online.
Step 1: Head to the official income tax department website.
Step 2: Click on the "Forms" section on the website.
Step 3: Then click "Form 15G and 15H" under the forms section to download.
Step 4: Further, fill out the form by providing all the necessary information and upload it.
Step 5: Next, pay the requisite or asked fees.
Step 6: Click the "submit" button after paying the fees.
What to Do When Forget to Submit Form 15G & Form 15H?
If individuals somehow fail to submit the forms to financial institutions, they have already deducted the TDS. In those scenarios, one can follow the below-mentioned steps to correct their mistakes.
Submit Form Immediately - If individuals forget to submit Form 15G & Form 15H to financial institutions. Then, instead of panicking, they can submit the forms right away to avoid any further tax deductions for the remaining year.
File ITR - Individuals can claim their deducted TDS while filing for income tax returns. If the bank has deducted TDS, then while filing income tax, you need to provide the details of deducted TDS. Filing or submitting income tax within the due date is necessary. However, the due date varies for individual taxpayers and entities. To claim a refund, it is essential to provide the primary details of Form 15H and 15G.
Conclusion
Undoubtedly, Form 15H and 15G are crucial income tax documents that help individuals with TDS deductions on their interest income. However, it is crucial to maintain the primary condition of these forms, which is that individual tax liability should be zero or nil to avoid any case of tax evasion.
Individuals seek ways to avoid tax obligations, but tax evasion can be fined. So, instead of indulging in fraudulent activity, you can invest in financial schemes. As per the UTA, 1961, Section 80C, one can exempt tax obligations by investing in financial products such as insurance, FD, EPF, etc.
