Filing of Form 15G / Form 15H – An Analysis

This article is all about Form 15G and Form 15H. As we all know that these forms are generally file to avoid TDS deduction. This article will cover the meaning and conditions of Form 15G and Form 15H alongwith some examples and relevant CBDT circulars.

I. Introduction of Concept of Form 15/ Form 15H

The Finance Act, 1982 had inserted a new section 197A to Income-tax Act, 1961 (‘the Act’) which enables tax payers to receive interest on securities, dividends and other interest without deduction of tax at source if his estimated total income of the previous year is less than the minimum liable to income-tax i.e. Rs. 2,50,000. The facility of claiming payments of interest on securities, dividends, etc., under section 197A is available only in the case of individuals who are resident in India within the meaning of section 6 of the Act.

Tax payers seeking non-deduction of tax from certain incomes are required to file a self-declaration in Form 15G or Form 15H as per the provisions of Section 197A of the Act. The manner of filing such declarations and the particulars have been laid down in Rule 29C of the Income-tax Rules, 1962 (‘the Rules’).

II. Issue for consideration relating to Form 15/ Form 15H

Various representations have been received by the CBDT seeking clarification on the issue as to whether a depositor should submit only one declaration in respect of the income each year before each person responsible for making the payment (i.e. deductor) or Form 15G/Form 15H has to be submitted each and every time the payment is due to be received from the deductor.

III. Clarification by CBDT relating to Form 15/ Form 15H

Para 5 of Circular No. 351, dated 26-11-1982 issued by the Central Board of Direct Taxes (CBDT) provides that it will be sufficient if only one declaration is made in respect of the income each year before each person responsible for making the payment. Hence, where payments are to be made by the same person more than once in a year, the declaration in the relevant Form may be furnished before the first payment in a year becomes due.

Recently CBDT via Notification No. 6/2017, dated 30-05-2017 has settled all disputed issues, it is clarified by the board that:-

1) New Form 15G/15H has to be filed by the taxpayers if his income for each year changes.

2) Only one declaration is to be made in respect of the income each year before each deductor.

3) If the estimated total income changes and new investments are being made then taxpayers are required to provide particulars of same in the new Form 15G/15H.

4) While filing New Form 15G/15H, taxpayer’s needs to provide total number of earlier declarations along with aggregate amount of income for which such Form 15G/15H have been filed.

IV. What is 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 years or more claiming certain receipts without deduction of tax.

• Form 15H can be submitted only by Individual above the age of 60 years.
• 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.
• You need to submit form 15H to banks if interest from one branch of a bank exceeds 10000/- in a year.
• 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 Rs.100000 each. You must submit the Form 15H to each branch.
• Submit this form before the first receipt of your interest. It is not mandatory but it will avoid the TDS deduction. In case of the delay, the bank may deduct the TDS and issue TDS certificate at the end of the quarter.
• You need to submit for 15H if interest on loans, advances, debentures , bonds or say interest income other than interest on bank deposits exceeds Rs.5000/-.

V. What is 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 who is below the age of 60 years and by Hindu Undivided family.
• The points applicable for 15H are applicable to the Form 15G as well, except that the Form 15H is applicable only for the senior citizens.
• Form 15G should be submitted before the first receipt of interest on fixed deposits.

VI. Difference between form 15G and Form 15H:-

1. Form 15G can be submitted by an individual below the Age of 60 Years while form 15H can be submitted by senior citizens i.e. individual’s above the age of 60 years.

2. Form 15G can be submitted by Hindu Undivided families but form 15H can be submitted only by Individual above the age of 60 years.

3. Form 15G CAN NOT BE filed by any person whose income from interest on securities/interest other than “interest on securities”/units/amounts referred to in clause (a) of sub-section (2) of section 80CCA exceeds maximum amount not chargeable to tax.

VII. Conclusion: Situations to submit Form 15G/15H

To understand the several situation, let’s take an example that Mr. A has maintaining one fixed deposit account (FD) with a bank and receiving interest income of more than Rs. 10,000. The following are some practical situation which suggests submission of Form 15G/Form 15H.

Situation 1: Bank is crediting interest income to taxpayer account on maturity of FD.

Ideally, the Form 15G/ Form 15H should be submitted by Mr. A at the beginning of the year to avoid a situation of tax deduction at source. However, he can submit the Form at any time before maturity of FD.

Situation 2: Bank is crediting interest income to Mr. A account on quarterly basis.

Form 15G or Form 15H should be submitted by Mr. A at any time before the end of 1^st quarter in which such interest is credited by bank. For the remaining quarters, he is not required to submit Form 15G/ Form 15H again.

Situation 3: During the financial year, Mr. A has opened a new fixed deposit account with another bank.

In this case, since Mr. A will receive interest income from two different bank (i.e. deductor), he is required to submit Form 15G/ Form 15H to another the bank separately in order to avoid deduction of tax at source from another bank.

Situation 4: During the financial year, Mr. A has opened a new fixed deposit account but with same bank, interest is being credited on quarterly basis.

In this case, since a new investment has been made by Mr. A in form of a new fixed deposit, he has to submit a new Form 15G/15H to the same bank declaring particulars of change in estimated total income along with detail of his old investment and declaration.

Situation 5: While filing Form 15G/15H to bank, Mr. A has mentioned only interest income as his estimated total income. However during the financial year, he let out his house property and started earning rental income.

In this case, Mr. A is required to submit new Form 15G/15H to bank though he has not made any new investment with same bank. As per notification (Supra), new Form 15G/15H is to be filed in every situation where the estimated total income of taxpayers changes. Since, Mr. A has let out his house property and earning rental income, he is required to furnish new Form 15G/15H to bank declaring particulars of his rental income along with detail of his old investment.

(Republished with Amendments)