What Is Form 15G & Form 15H
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What
is Form 15G/ H and its relevance:
Basically,
as you may be knowing, Tax at source is deductible (TDS) on some interest paid or
payable, above Rs. 5,000/- (Rs. 10, 000/- if the payer is a bank). If yearly interest
payment doesn’t exceed Rs. 5,000/- or Rs. 10, 000/-, as mentioned above, then
there is no liability to deduct tax at source.
TDS is nothing but tax paid in advance on behalf of the payee and credit for the same can be
claimed by the payee at the time of filing the income tax return. However, TDS
can be avoided by the payee by submitting declaration form No. 15G/15H. These
forms have to be filed in duplicate and once the payer (bank, post office,
company etc) takes them on record, the entire interest is to be paid to the
depositor / lender without TDS. There are certain precautions one should
take while submitting these forms. Filing a wrong form without being eligible to
do so would be illegal and could involve payment of interest on the tax payable
and also attracts penal consequences. The conditions under which Form 15G and
15H may be filed are almost similar yet there is a significant difference which
needs to be noted carefully. In routine course, lot of taxpayers end up filing
one of these forms when they are not eligible to do so and vice versa.
The main 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 main 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.
Who can submit form No. 15G :-
First
and foremost only, a person who is resident in India can submit form No. 15G.
NRI cannot submit this form. To be eligible to furnish Form 15G, the non-senior
citizen needs to fulfill the following two conditions:
- The final tax on his estimated
total income computed as per the provisions of the Income Tax Act should
be nil; and
- The aggregate amount of
interest income etc. received during the financial year should not exceed
the basic exemption limit for that relevant year.
If
both these conditions are satisfied, Form 15G may be furnished to the payer
& entire interest income could be received without any TDS.
Who can submit form No. 15H : -
Any resident individual, who is
above the age of 60 years or has completed the age of 60 years at any time
during the financial year, can submit form No. 15H provided his tax liability
on the basis of his estimated income is nil. Unlike form No. 15G, this form can
be submitted by the senior citizen even though the total interest amount from
the payer may exceed Rs. 2.50 Lacs (i.e., the limit of basic exemption limit).
Difference
between form 15G and 15H: -
- Form
15G can be submitted by individual below the Age of 60 Years while form 15H
can be submitted by senior citizens (60 years & above).
- Form
15G can be submitted by Hindu undivided families also but form 15H can be
submitted only by Individual above the age of 60 years.
- 15G cannot be filed by any
person whose income from interest on securities/interest other than
“interest on securities” exceeds the applicable basic exemption limit.
Certain
points to remember while submitting Form 15G & 15H:-
- Please ensure to mention
Permanent Account Number (PAN) on the forms while submitting form No. 15G
or 15H. In case, taxpayer fails to provide PAN to the deductor, the tax
would be deductible @ 20%. As a precautionary measure, taxpayer
should keep hard copy of an acknowledgement of 15G/15H filed with the
deductor (with PAN mentioned over it) to ensure that tax is not deducted
at all.
- These Forms are to be submitted
in duplicate, one of which is forwarded to the IT department. Income Tax
Authorities can make further inquiries regarding the declaration filed by
the depositor.
- The form should be submitted at
the beginning of each financial year or at the time of deposit itself so
as to avoid a situation where payer has already deducted the tax before
its receipt.
- If a person is making FD in
different branches of same bank then these forms should be deposited at
each and every branch where the deposit has been made. For example, if Mr.
Ashish has made deposits at three different branches of SBI, then he has
to submit the Forms at each branch separately.
- These Forms can only be used
for payments like dividends, interest on securities, interest other than
interest on securities, national saving schemes, and interest on units.
For other types of payments (like brokerage, rent etc), these forms cannot
be used.
- It may be noted that new set
of forms are required to be filed every year and the eligibility
criteria as stated above needs to be examined every year before
furnishing the forms. Form 15G / Form 15H, once submitted, is valid for
the financial year in which it is furnished. For subsequent years, the
form would be required to be submitted again if assessee wants to receive
the interest without deduction of tax at source.
- No TDS is deductible by banks
on interest payable in saving bank accounts and recurring deposit accounts
- In case of bank FDR made for
longer duration, even if interest will be paid on maturity only, the bank
is required to deduct tax at source on the interest accrued for that year
even though no interest in fact has been paid. So, ensure to submit form
No. 15G/H on yearly basis even if FD doesn’t mature in that year.
- Any false or wrong declaration
attracts penalty under section 277 & so it should not be signed
blindly. Such false declaration is liable for prosecution which may range from
3 months to 7 years depending upon the quantum of default. Taxpayer can be
penalized with rigorous imprisonment irrespective of fact that such wrong
details were furnished intentionally or unintentionally as “Ignorance
of Law is no excuse.”
- Further, the taxpayer may
please note that Part A1 in form 26AS shows the interest on FD’s against
which tax is not deducted due to submission of Form No. 15G/ 15H. The
information is readily with the IT department.
- Irrespective of the fact that
Form15G & 15H has been filed or not, such income has to be mentioned
under proper head while filing the return.
Hope
it may be clear that you need to comply with certain conditions to be eligible
to file form No. 15G or 15H. Moreover, you need to take certain precautions
while filing these forms with the payer.
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