Form 15G and Form 15H: How to Save TDS on Interest Income?

India's tax landscape is complex, with various provisions and forms that help individuals minimize their tax liabilities. When it comes to interest income, one of the key concerns is Tax Deducted at Source (TDS). TDS is a mechanism through which the government collects taxes at the source to ensure that taxpayers meet their tax obligations.

However, to provide relief to small taxpayers, especially those with low or no taxable income, the Income Tax Department has introduced Form 15G and Form 15H. In this blog, we'll explore what Form 15G and Form 15H are, who is eligible to submit them, and how they can help you save TDS on your interest income.

Understanding Form 15G and Form 15H

Form 15G and Form 15H are self-declaration forms provided by the Income Tax Department that allow individuals to claim exemption from the deduction of TDS on their interest income. These forms are primarily aimed at providing relief to taxpayers whose total income is below the taxable limit. The main difference between the two forms is the age criteria and the threshold income level:

• Form 15G: This form is for individuals below the age of 60. To be eligible to submit Form 15G, your total taxable income, including the interest income for which you want to claim exemption, should be below the basic exemption limit (i.e., the minimum income at which you become liable to pay taxes).
• Form 15H: This form is for senior citizens, i.e., individuals aged 60 years or above. Like Form 15G, to submit Form 15H, your total taxable income, including the interest income, should be below the basic exemption limit.

By submitting either Form 15G or Form 15H, eligible individuals can prevent banks and other financial institutions from deducting TDS on the interest income they earn.

Eligibility Criteria to Fill Form 15G and Form 15H

Now that we understand the basic difference between Form 15G and Form 15H, let's delve into the eligibility criteria for each of these forms.

Eligibility for Form 15G:

• You must be an individual below the age of 60.
• Your total income, including the interest income, should be below the basic exemption limit.
• The interest income for which you want to claim TDS exemption should be from sources such as fixed deposits, recurring deposits, or savings accounts.
• The total interest income should not exceed the threshold limit specified by the government. As of my knowledge cutoff date in 2022, this threshold was set at Rs. 10,000 per year. Please verify the current threshold limit as it may change over time.

Eligibility for Form 15H:

• You must be a senior citizen, which means you should be 60 years of age or older.
• Your total income, including the interest income, should be below the basic exemption limit.
• Similar to Form 15G, the interest income for which you want to claim TDS exemption should be from sources such as fixed deposits, recurring deposits, or savings accounts.
• The total interest income should not exceed the threshold limit specified by the government.

Benefits of Submitting Form 15G and Form 15H

The primary benefit of submitting Form 15G or Form 15H is to avoid the deduction of TDS on your interest income. By doing so, you can receive the full interest amount without any TDS deductions. This is particularly beneficial for individuals with limited income who are not liable to pay taxes on their interest earnings.

Additionally, these forms can save you from the hassle of claiming a TDS refund. When TDS is deducted, you may need to file an income tax return to claim a refund of the excess tax deducted. By submitting Form 15G or Form 15H, you can skip this step and ensure that the correct amount of interest income reaches you.

It's essential to remember that the responsibility lies with the individual to ensure that they meet the eligibility criteria and submit the appropriate form. Providing false information in these forms can lead to penalties and legal consequences.

How to Fill and Submit Form 15G and Form 15H

Filling and submitting Form 15G and Form 15H is a straightforward process. Here's a step-by-step guide on how to do it:

• Download the Forms: You can download Form 15G and Form 15H from the Income Tax Department's official website or collect them from your bank or financial institution.
• Provide Personal Information: Fill in your details, such as your name, PAN (Permanent Account Number), residential address, and email address.
• Mention your Age: In the form, clearly indicate your age to determine whether you are eligible for Form 15G or Form 15H.
• Provide Income Details: Declare your total income, including the interest income for which you are claiming exemption from TDS. Make sure this income is below the basic exemption limit.
• Furnish Bank and Account Details: Specify the bank name, branch, and account number from which you expect to earn the interest income.
• Submit the Form: Once you have filled the form, you can submit it to your bank or financial institution where you hold the interest-earning accounts. Many banks also provide the option to submit these forms online through their Internet banking portals.
• Verification and Acknowledgment: After submitting the form, the bank will verify your details and, if everything is in order, acknowledge the receipt of the form. They will then ensure that TDS is not deducted from your interest income.

Remember that you need to submit these forms at the beginning of the financial year or when you open a new account. The submission of Form 15G and Form 15H is valid for one financial year, and you need to renew it each year if you continue to meet the eligibility criteria.

Penalties for Providing False Information

While Form 15G and Form 15H offer a significant advantage in terms of saving TDS on interest income, it's crucial to provide accurate information. Providing false or incorrect details can lead to penalties under Section 277 of the Income Tax Act. Penalties may include imprisonment and fines for willful submission of false information. Therefore, always ensure that you meet the eligibility criteria before submitting these forms.