Avoid TDS : Form 15G or Form 15H

When you open a fixed deposit with bank then you are lending money to the bank and it pays you interest. Applicable interest rates will be given as on the date of receipt of the funds by the bank and is fixed for the specified duration. Interest that is earned on fixed deposits is taxable in the hands of the depositor.  Tax or TDS is deducted by the bank, if the aggregate interest income from fixed deposits that you are likely to earn for all your deposits held in a branch is greater than Rs 10,000 in a financial year. In our article Fixed Deposits and Tax we looked at Taxation aspect of Fixed Deposits. We saw that we can avoid getting TDS cut(not avoid paying tax though Cry ) by Distributing FD investment, Timing the FD,By Submitting Form 15G/15H. 

The conditions under which Form 15G and 15H may be filed are similar yet with a significant difference.  Each taxpayer needs to fully understand the specified conditions and ascertain whether he or she is eligible for filing the relevant form. Filing the form without being eligible to do so is illegal and will invite payment of interest on the tax payable and also a penalty. This article is about explaining the difference.

Income Tax Act

If you believe that your total interest income for the year will not fall within overall taxable limits, you should inform the Bank not to deduct TDS on deposits. You can do this by submitting a form as per the provisions of the Section 197A of Income Tax Act. Quoting fromSection 197A

The Finance Act, 1982 has inserted a new section 197A with effect from June 1, 1982. The section enables an individual who is resident in India and whose estimated total income of the previous year is less than the minimum liable to income-tax to receive interest on securities, dividends and other interest without deduction of tax at source under sections 193, 194 and 194A of the Act on furnishing a declaration, in duplicate, in the prescribed form and verified in the prescribed manner. Rule 29C and Form Nos. 15F, 15G and 15H have been inserted in the Income-tax Rules, 1962 by the Income-tax (Fifth Amendment) Rules, 1982 prescribing the forms for the purposes of section 197A and laying down the procedure for furnishing the declaration form.

The forms required for different categories have been listed below:

 Category of Tax Payer Income Tax Section  Form New Forms
Individual:Senior Citizen Sub-section (1C) of section 197A  15H (pdf) Form15H (pdf)
Individual:Non senior Citizen Sub-sections (1) and (1A) of section 197A  15G(pdf) Form15G (pdf)
Trusts/SocietiesAvailable from Assessing Officer  15AASample form(pdf)

Rule 29C of Income Tax Rules offers individual taxpayers the facility of furnishing Form 15G or 15H, as the case may be, requesting the payer of income not to deduct any tax. These forms have to be filed in duplicate and once the bank or the post office takes them on record, the entire interest is paid to the investor without any tax deduction. Important points that one needs to remember is

  • Fresh forms are required to be filed each year. As incomes of investors may differ from year to year, the eligibility for furnishing the forms has to be ascertained every year.
  • Secondly, for optimum benefit, these forms need to be furnished at the beginning of the fiscal such that the entire amount of interest escapes TDS. If the form is filed during the year, the tax already deducted cannot be adjusted against future tax deductions.
  • This form should be submitted to all the deductors to whom you advanced a loan. For example you have deposit in three SBI bank branches with interest of or more Rs.10,000 each. You must submit the forms to each branch.
  • You need to submit forms if interest on loan ,advance, debentures , bonds or say Interest income other then interest on bank exceeds Rs 5000.

Difference between forms 15G and 15H

Form 15H: Declaration under sub-section (1C) of section 197A of the Income-tax Act, 1961, to be made by an individual :

  • Who is of the age of sixty-five years or more (60 years from 1st July, 2012) claiming certain receipts without deduction of tax.
  • Estimated tax for the previous assessment year should be nil. That means he did not pay any tax for the previous year because his income is not coming under the taxable limit.

Form 15G: Declaration under sub-sections (1) and (1A) of section 197A of the Income-tax Act, 1961, to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax of tax.

  • Form 15G can be submitted by Individual below the age of 65 years (Age limit reduced to 60 Years from from 1st July, 2012)).
  • The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil.
  • The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab which for financial year 2011-12 or Assessment Year 2012-13 is Rs1,80,000 for men, Rs1,90,000 for women, Rs 2,50,000 for Senior citizens,(60-80 years), Rs 5,00,000 for citizens above 80 years. Please note that these exemption limits keep on changing. For financial year 2012-13 or Assessment Year 2013-14 exemption is Rs 2,00,ooo for men and women and  Rs 2,50,000 for Senior citizens,(60-80 years), Rs 5,00,000 for citizens above 80 years.Income Tax rates Since AY 1992-1993 has all the income slabs and exemptions since Assessment Year 1992-193.

Quoting from Tax expert Sandeep Shanbhag in  DNA:Who is eligible for filing forms 15G, 15H and how to save TDS(Sep 2011) To further understand these provisions, let’s take the example of Mr Shah, who is 55 years old. Shah’s total income is Rs 2,90,000, of which Rs1,90,000 is earned by way of interest from bank deposits. Shah also invests 1,00,000 under Section 80C and pays a medical insurance premium of Rs15,000. Is Shah eligible to furnish Form 15G?This can be ascertained by finding out if he satisfies both the above conditions.

  • The first condition is that Shah’s final tax liability should be nil. Though Shah’s gross income is Rs2,80,000 lakh, on account of his Section 80C and Section 80D deductions of Rs1,00,000 and Rs15,000 respectively, the net income falls to Rs1,75,000 lakh and consequently he is not liable to pay any tax. Therefore, Shah satisfies the first condition. 
  • However, we find that since his interest income of Rs1,90,000 is more than the basic exemption limit of Rs1,80,000. Shah doesn’t satisfy the second condition and hence he is not eligible to furnish Form 15G to the interest paying organisation.

On the other hand Form 15H imposes just the first condition, in that, the final tax on the investor’s estimated total income computed as per the provisions of the Income Tax Act should be nil. The second condition imposed by Form 15G is not applicable in the case of Form 15H.

For example, say Mr. Mehta, 68 years old, has a total income of Rs 3,00,000, out of which Rs45,000 is earned from the senior citizens saving scheme and the rest from bank deposits. He invests Rs 50,000 in PPF. Now, is he eligible to furnish Form 15H?

As pointed out earlier, all Mehta has to do is to ascertain his final tax liability. It doesn’t matter what amount he receives from which source; this information is irrelevant for Form 15H. We find that Mehta’s net income works out to Rs2,50,000 (Rs3,00,000 – Rs50,000). As the basic exemption limit for Mehta is also Rs2,50,000 (on account of him being a senior citizen), his net tax liability is nil and hence he is indeed eligible to submit Form 15H.

So difference between Forms 15G and 15H is that

  • Form 15G is meant for non-senior citizens whereas Form 15H is meant for senior citizens only.
  • The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab for Form 15G while no such condition exists for Form 15H.

The Income Tax department has been modified the Form 15H and Form 15G as per amended notification No. 11/2013 [F.NO.142/31/2012-SO(TPL)]/SO 410(E) Dated 19.02.13.  The only major change in these forms, compared to the earlier versions, is the addition of a column to mention the total estimated income from all sources, including the income for which exemption from TDS is requested. The columns are also organised better. Now there is not much difference between Form 15G and 15H. (Updated on 2 Apr 2013)

These differences are highlighted in the images from the forms below. 15H is a simple 2 page form while 15G is 3 page form with various schedules for declaring income from different sources. 

Penalty in filling wrong form

Penalty

Penalty

Myths & Facts about Form 15G & Form 15H

Quoting from caclubindia:What is Form 15G and Form 15H

Sl. No. Myth Fact
1 Anybody who wishes to avoid tax deduction can make use of Form 15G/15H Only persons with income below taxable limits and Nil Tax liability can only make use of this form.
2 Once declaration is given in Form 15G/Form 15H, there is no need to declare this income in return of Income. Irrespective of the fact whether the Form is used or not, the respective income should be compulsorily declared in return of income.
3 Once declaration is given in Form 15G/Form 15H, there is no need to pay tax on the same. As per the provisions, only persons with NIL tax liability only can give these forms. But if there is a tax liability, they have to necessarily pay the requisite tax. On the other hand, by payment of tax they run the risk of giving a wrong declaration. Hence before giving Form 15G/15H, please be doubly careful.
4 Form 15G & 15H are submitted only to the banks/Financial Institutions/Payer. This is partly correct. The person who receives the Form 15G/15H is required to submit one copy of the Form to the Commissioner of Income-tax . Hence the information is passed on the Income-tax department and the Income-tax Department can make further enquiries on the same.
5 Submission of Form 15G/15H once is sufficient. No. These forms shall be submitted every Financial year at the beginning of the Financial year.
6 It is enough that irrespective of the fact that deposits are held in different branches, a single Form is sufficient. No. These forms should be submitted to each and every branch where you hold the deposits. For example, if you hold deposits in 3 different branches of State Bank ofIndia, this declaration shall be given for each branch separately.
7 Since my Income is below taxable limits and tax is NIL , I do not have to submit the PAN details with the declaration No. Every person giving declaration using Form 15G/15H shall compulsorily provide the PAN details along with the declaration irrespective of their Income/Tax status. Otherwise tax will be deducted @ 20% on the Interest (w.e.f 01/04/2010)
8 Form 15G/15H can be used for not deducting TDS for all types of payments (viz.,) Contract payments, Professional fees, rent,etc., These forms can be used only for payments in the nature of Interest of Securities, Dividend, Interest other than Interest on Securities (Bank/Company Deposits) , NSS & Interest on Units. For other types of payments, these forms cannot be used.

References:  TaxGuru:Download, know, FAQ on Form 15G & 15H (Apr 2012), DNA:Who is eligible for filing forms 15G, 15H and how to save TDS(Sep 2011)YahooFinance:Minimising TDS on your fixed deposit  (Apr 2012), JagoInvestor:What is Form 15G and Form 15H,(Jun 2011)

Related articles:

The conditions under which Form 15G and 15H may be filed are similar yet with a significant difference. Hope we have been able to clarify the difference.

22 Responses to Avoid TDS : Form 15G or Form 15H

  1. Ram says:

    Kindly guide me as i am caught in a big dilemma!…
    I have deposited form 15g with my bank today on 02.05.15 saturday.
    My doubted question is that i have not earned a penny from 1st jan 2014 to 30th april 2015.ie no salary income or from any source.
    I had an FD done from my savings ac for 5 lakh rupee on 30 july,2014 which will get mature on 31 july 2015.
    my mature value is 5.47 lakhs.I had got message from bank to deposit 15g to avoid TDS.So i have filed form 15 G.
    Now since i have got a job and i will be joining job around from 15th may,2015 with salary of around 35K and ctc around
    4.2L PA.Now i have come to know from your posts in this wealth18 that i have wrongly filed 15 g form.I want to know what i can do to correct my mistake.the salary i will get from my company will be after deducting tax wich will be deposited in IT dept.Now can i be fined for my mistake i did ignorantly.since i have first time made an FD and filed 15 G form.I am deeply worried since i have learned there is hefty penalty and even imprisonment.Kindly reply me at the earliest i am very much worried.
    Also i have read in your post that now in form 15 g there is one column where we have to write our estimated income for the financial year but i have not written any thing like this on form 15 g since i have not found any column related to it where i must have declared my estimated income from my salary.please help me.what best i can do.

    • Kirti says:

      Sir please don’t get worked up. No one should come after you.
      You have filed Form 15G for which year FY 2014-15 or FY 2015-16?
      Was your total income below 2.5 lakh?
      Income from salary
      Income from interest on Fixed Deposit : The income is interest and not maturity amount. So your income from FD is 47,000.
      Income from Saving Bank account : If it’s less than 10,000 it should not be accounted and if more than 10,000 ex 12,000 then excess amount ie 2000 should be taken as Income from other sources.

      When you fill Form 15G TDS is not cut. If your income is above 2.5 lakh then you have pay tax on your Total income.
      As TDS was not cut it would be reflected in your Form 26AS.
      While filing Income tax return(ITR) for FY 2014-15 by 31 Jul 2015 please include your FD income and things should be fine.

  2. Anushka says:

    Can Form 15H be submitted to Deductors other than Banks also? or this form is just of Banks alone?

    • Kirti says:

      Form 15G and Form 15H are forms which can help a person avoid TDS incase one does not have to pay income tax at the end of the year. Form 15H is for senior citizens and form 15G is for others
      Mostly people use it to avoid TDS for FDs in Banks.

  3. Deepak Gour says:

    Dear Sir,

    Is 15G is required to submit in NRE fixed deposit or not.

    Regards
    Deepak Gour

  4. Vishal says:

    Thanks for the very useful information.
    I would like to know the TDS deductions for NRIs.

    I m an NRI living in UAE. So no tax applicable. But if I m putting a FD with my NRE account. How much TDS will be dedcuted and how can I be exempted from that. What is the expemption limit.
    For example, we can take FD of 20 00000 INR.

    • admin says:

      First NRIs, irrespective of their age, are not eligible to file Form 15G or 15H as the case may be.
      NRI’s opening Fixed Deposit can avail benefit of the lower TDS depending on the overseas country of resident popularly called as Double Taxation Avoidance Agreement (DTAA). DTAA is an agreement entered by India with various countries. NRI customers residing in countries that have signed DTAA with India will be eligible for a DTAA applicable rate of Lower TDS on the interest earned from the Term Deposits booked out of the funds remitted from overseas or from their NRE accounts.

      These lower TDS rates (lesser than 30.9%) for the respective countries are decided by Income tax authorities. E.g. for USA, the lower rate is 15%, for UAE it is 12.5% etc.
      In order to avail lower TDS, customers need to fulfill the following requirements:

      The customer should be a tax Non-Resident as per the Indian Income Tax Act.
      The customer should be a resident (tax resident) of the DTAA country and should be entitled to Treaty Benefits as per the criteria defined in the respective DTAA.
      The customer should be the beneficial owner of the funds and interest thereon.

      If one is desirous of availing the rate of deduction of tax as per the DTAA, the same will be applicable only on your submitting the relevant documents along with your PAN Number usually before beginning of financial year, every year. PAN updation is mandatory to avail of DTAA.
      One set of the below documents is required per Customer ID.

      DTAA Annexure – Declaration that the client was an NRI during the year in which tax is sort to be deducted & that he does not have any permanent establishment in India.
      Original or certified true copies of the ‘Tax Residency Certificate’ (TRC) from the income-tax authorities.TRC are issued by the tax/government authority of the country where the NRI resides. For tax residents of countries where there is no income tax, a “Self-declaration” shall be submitted by the depositor to the Branch.
      Self attested copy of passport & visa.
      For UAE and KUWAIT ONLY- photocopy of the passport pages which give the details of entry and exit.(to ascertain 183 days stay in a calendar year for UAE and 183 days in a financial year for Kuwait)

      If no certificate under DTAA is submitted by the depositor, then Income Tax at a rate of 30.90% will be deducted at source on interest earned in the NRO accounts/deposits irrespective of the amount of interest.

      Does that answer your question vishal. You can also check out comments in the post Fixed Deposits and Tax where we have tried to answer for Nesha

  5. Srinivas says:

    I would like to know if one has to submit 15G for each deposit in a bank or a 15G can cover all FD’s in a bank for the year.

    My bank officer says, i have to submit individual 15G’s for each deposit.

    Please let me know.

    Thanks in advance.

    • admin says:

      Not sure Srinivas. The Form 15G is pretty long one with declarations about securities, NSC, dividends etc. Didn’t find any reference to Fixed Deposit account number.
      I assume you have to go with what bank officer says and submit multiple declarations.
      In the meanwhile shall try to find about it from bank near my area and update.

      • Srinivas says:

        Thank you for the response.

      • Naresh says:

        As per my information, 15G is required to be submitted for each branch.
        Not sure for the same branch, several 15G are required

        • admin says:

          You are right Naresh.
          As per my understanding – Form 15G has to be submitted for FD with ownership details same.

          For ex if Mr Shah has opened a FD with him as primary account holder and his wife as secondary for 1 year, 3 year then for all these FDs only one 15G is sufficient.
          But if he opens one FD with him as primary and other with his wife as primary then these are separate hence he needs to submit 2 form 15G.
          What are your thoughts on it?

  6. Raghvendra says:

    My wife is not working so if i open FD under her account (interest more than 10k), Is she eligible to file form 15G? I am earning more than 3 lakhs.

    Thanks

    • admin says:

      Let take example of Mr Aryan Sharma. He gift’s some of his money to his wife, Anjali, who is not earning anything otherwise. Anjali invests that money in a fixed deposit and earns interest. Logic being that since his wife doesn’t have any income, interest earned on such money would be below taxable limit and therefore, she won’t have to pay any tax on such an income.
      In a scenario like this, interest earned from the fixed deposit will be taxed in the hands of Aryan and not Anjali. So there is no tax saving for Aryan.
      People think if they transfer their money or assets to family members then they would be able to avoid the tax. To counteract such practices of Tax Avoidance necessary provisions have been incoroprated in the Section 60 to 64 of the Income Tax Act. In technical terms it is called as Clubbing of Income.

      So your wife might be eligible to submit form 15G but you will be taxed.

      A workaround often suggested is:
      Give her an interest free loan so that she can generate her own money and return the sum back to me in due course of time
      But please verify with the CA.

  7. Brij says:

    I have submitted for 15H this year as my income was below the 2.5L limit. However, it was recently pointed out to me that I might have made an error in my calculations. Basically, I did not incorporate “ACCRUED INTEREST”m in my calculations. My net income in Form 15H is shown as 2.43L..however, with the ACCRUED interest, it is likely to jump to 2.56L.

    I am uncertain how to handle this. Is there still an option for me to do a correction / rectification of my 15H? I am concerned that ITO might flag me for incorrect submiission subject to penal consequences.

    I request the forum members to kindly guide me here. You help is much appreciated.

    Thank you.

    • admin says:

      Sad to hear that Mr Brij. As per the law Consequences of False/Incorrect Declaration are given below. But before you panic please check if the TDS was deducted by checking Form 26AS. There have been cases where Form 15H was submitted but bank did not deduct it. If no TDS has been deducted then you can file return. If TDS has been deducted then please talk to Chartered Accountant or Income tax lawyer.
      :-
      Any person making a false statement in the declaration shall be liable to prosecution under section 277 of the Income-tax Act, 1961, and on conviction be punishable -
      (i) in a case where tax sought to be evaded exceeds one lakh rupees, with rigorous imprisonment which shall not be less than six months but which may extend to seven years and with fine;
      (ii) in any other case, with rigorous imprisonment which shall not be less than three months but which may extend to three years and with fine.

      Please do keep our readers updated.

  8. uma says:

    I have taking pension of 101500 p.a. And also fixed deposit is 120000. Can i submitt 15G to dedect TDS. and i need to submitt tax return. Plese help.

    • admin says:

      Maam,
      As you seem to be senior citizen the exemption limit for senior citizen is 2,50,000. If you have no other income and Tax on your Fixed Deposit is more than 10,000 Rs in a year, to avoid TDS you can submit Form 15G. If interest is deducted the only way to reclaim is to file a return. Please get in touch with your bank and submit the form.

  9. HARESH says:

    Good information. Is it necessary to file return for senior citizen who’s total annual income for financial year 2011-12 is less then Rs. 2,00,000 ?

    • admin says:

      You need to file an Income Tax Return if your Total Taxable Income exceeds the basic exemption limit before taking into account deductions, i.e., tax saving investments. The basic exemption limit for financial year 2011-2012 and 2010-2011 is
      Resident Female Rs.1,90,000
      Resident Senior Citizen Rs.2,40,000
      (Age > = 65 yrs as on 31st March of Financial year)

      Others (Resident Male, All Non-Residents and All Resident but Not Ordinarily Residents) Rs.1,60,000

      You do not need to file an Income Tax Return if your total taxable income does not exceed the basic exemption limit before taking into account deductions, even though you may have a PAN.
      But if have some TDS deducted and want to claim it you have to file Income Tax return

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