CA Naresh Jakhotia
Very often, readers keep enquiring about the submission of forms No. 15G/15H to the banks or others payer so that interest could be received without deduction of tax at source (TDS). In this column, I am covering all about Form No. 15G & 15H and hopefully the detailed elaboration hereunder would provide a comprehensive picture about the submission of Form No. 15G & 15H.
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.
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, 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.
I hope that from the above discussion, 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.
(Author is a CA in Practice from Nagpur and is Partner in M/s. SSRPN & Co.)