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2022

All you need to know about Form 15G/15H

All you need to know about Form 15G 15H Blog Post

Fixed Deposits with Banks and Post office are often preferred investment option for many. Especially, this instrument is most popular among senior citizens and a large chunk of middle class people in India. Banks deduct TDS on interest income when the limit crosses the threshold of ₹40,000 in a financial year under Section 194A of the Income Tax Act. The amount is set at ₹50,000 for senior citizens. However, if you an Individual taxpayer with total income below the tax limit you can prevent banks from deducting TDS on interest by submitting Form 15G or Form 15H. Here, the availability of two forms often confuses individuals as to which one is applicable to them. That is why a comprehensive knowledge regarding the difference between 15G and 15H is essential to help individuals choose the right form. 

Applicability of TDS on Interest Income:

  • Section 194A deals with the provisions relating to TDS on interest other than on securities. Tax is to be deducted under section 194A, if interest (other than interest on securities) is paid to a resident. Thus, the provisions of section 194A are not applicable in case of payment of interest to a non-resident. Payments made to non-residents are also covered under TDS mechanism, however, tax in such a case is to be deducted as per section 195.
  • The payer / deductor shall deduct TDS if the amount of such interest paid or credited or is likely to be paid or credited in a financial year, exceed 40,000 where the payer is:
  • Banking company or any bank or a banking institution
  • Co-operative society engaged in the business of banking
  • Post office (on deposit under scheme framed and notified by Central Government).
  • However, if the deductor / payer is any person other than specified in above point, the threshold limit shall be Rs. 5,000.
  • From FY 2018-19 onwards no TDS will be deducted on interest earned upto INR 50,000 by senior citizens. The interest amount should be earned from the following:
  • Deposits with banks;
  • Deposits with post offices;
  • Fixed deposit schemes;
  • Recurring deposit schemes.

However, if a tax payer’s total income for the concerned financial year does not exceed the maximum amount not chargeable to tax, he/she can declare the same in the prescribed Form 15G/15H. On submission of this Form Banks/Post Office shall not deduct TDS while making payment of interest.

About Form 15G:

  • Form 15G is a declaration form made by taxpayers in which they request the bank for non-deduction of TDS as their income is below the minimum exemption limit.
  • The Income Tax Act 1961 provides relief on tax liability in certain circumstances. If an individual has a taxable income of below ₹2,50,000, they are not liable to pay income tax.
  • Form 15G is applicable to Non-Senior Citizens. This means To be able to submit Form 15G, an individual’s age must be less than 60 years.
  • Here, if individuals earn interest on fixed deposits, banks can deduct TDS before crediting the interest amount to individuals’ accounts. However, if the total income does not cross the limit of ₹2,50,000, individuals can utilize Form 15G and avoid TDS deduction on interest income even if the amount goes beyond ₹40,000.

About Form 15H:

Form 15H is quite similar to Form 15G with the only difference as to who can submit this form. While Form 15G can be submitted by a non-senior citizen, a senior citizen needs to file Form 15H. This form is particularly allotted for individuals who have reached the age of 60. Please note, the forms have a validity of one year.

Deadline for Submission of Form 15G/15H:

  • It must be noted that deadline for submitting Form 15G/15H is 30th April of the relevant financial year.
  • The validity of these forms is one year. This means, the person must submit a new form every year.
  • Form 15G/15H are submitted at the beginning of the relevant financial year.
  • For non-deduction of TDS on the interest earned during the financial year 2022-23, this Form must be submitted to the concerned branch of Bank or Post Office till 30th April, 2022.

 

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