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Avoid TDS by Submitting Form 15G/ 15H

All banks and financial institutions as per Section 194A of the Income Tax Act must deduct tax on all FD interests exceeding Rs. 10000 in a financial year. Thus whenever ones total interest income from bank exceeds Rs. 10000, bank deducts TDS @10% (if PAN is not declared @ 20%). People with total income below taxable limit may suffer due to this provision. For example:

If a person has total FD interest income above Rs. 10000, tax will be deducted by bank. At the same time if that person's total income is below the basic exemption limit  he will not be liable to tax. As total income not being taxable he is not liable to tax. Now he can not go to bank and just ask the refund of tax deducted, because banks can not refund the tax deducted by them. To claim the tax deducted on his income he will be required to file his Income Tax return and only then the refund of TDS deducted by bank will be granted by Income Tax Department.

In such cases where a person's total income is below taxable limit and interest on FD is more than Rs. 10000, he can submit Form 15G/15H to the bank for non deduction of TDS. These forms are a declaration by the individual, that his/her total income from all the sources is below exemption limit and therefore no tax shall be deducted on his/her interest income.

Form 15G:
Form 15 G is a self declaration form for non deduction of tax on interest income to be submitted to the banks by individuals who are not senior citizens and who have total income (before deductions) below taxable limit.

Who can submit Form 15G?

Only a person not being a senior citizen satisfying following two conditions can submit Form 15G -
  • Tax liability on estimated total income for the year under cosideration shall be NIL
  • Total interest income from all the banks and sources shall not exceed the basic exemption limit
Form 15 G can be downloaded from  the national website of Income Tax India.

Form 15H:
Form 15 H is a self declaration formfor non deduction of tax on interest income to be submitted to the banks by senior citizens(individuals above the age of 60 years) and who have net total income(after deductions) below taxable limit.

Who can submit Form 15H?
Only a senior citizen satisfying following one condition can submit Form 15H -
  • Tax liability on estimated total income for the year under cosideration shall be NIL.
There is no other condition for submitting Form 15H.
Form 15H can be downloaded from  the national website of Income Tax India.



When to submit Form 15G/15H

One can submit Form 15G/15H any time during a year but the best time to submit Form 15 G/ Form 15H is at the start of  the financial year ie. during the month of April. Submitting the form at the start of year will save you from the deduction of TDS on your interest income for full year. So it will be possible to avoid TDS on entire interest income.

Form 15G/15H  are to be submitted on yearly basis. Form submitted in a year is valid for that year only. For example if someone has a FD for 3 years and his total estimated income for these three years is expected to be below taxable limit, to avoid TDS he must submit Form 15G/ 15H in each of the three years.

Some important facts to know while submitting Form 15G/ 15H

  • NRI's are not eligible to furnish Form 15G/15H.
  • Form 15G/15H is submitted in duplicate, one copy is kept by bank and the second copy is sent by bank to Income Tax department.
  • As per RBI guidelines banks are now required to issue an acknowledgement of receipt of the form.
  • Banks deduct tax not only on interest paid but also on accrued interest, so in case of an FD for 3 years TDS will be deducted each year on the interest due.
  • No TDS is applicable on savings bank interest even if total interest amount exceeds Rs. 10000.
  • As forms are submitted at the start of the financial year, the declaration is made about estimated total income.

Links for :
Taxability of Interest Incomes
Taxability of Pension Received
TDS on Purchase of House Property
Capital Gain on sale of House Property
Basic exemption limit for the financial year 2013-14
Basic exemption limit for the financial year 2012-13









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