Employee retention strategy '23 ebook - Limited free downloads

Significance of Form 15G and 15H

Form 15G and Form 15H, key instructions of form 15g, how to fill form 15g,

Fixed deposits investments have interest rates anywhere from 2.5% to 5.5%, and with these deposits comes guaranteed security. Therefore, fixed deposits are one of the most preferred investment options for most people.

But do you know the interest one earns on these fixed deposits is liable for tax deduction?

This tax deduction is called tax deduction at source or TDS. The concept of introducing TDS was to collect tax from income sources. According to this, a person (also known as a deductor) who is liable to pay a certain amount to another person (known as deductee) must deduct tax at the source and revoke the same to the Central Government of India. For more details regarding TDS, you can visit the Income Tax Department of India.

Before budget 2019 the threshold limit for TDS deduction on interest income was Rs 10,000. In the 2019 budget the government decided to increase the threshold limit to Rs 40,000. So, if your interest income on FDs is less than 40,000 per year, then no amount would be deducted by the bank based on TDS. If the citizen is 60 years or above then the threshold limit is Rs 50,000.

Bank deducts 10% of interest income in all the FDs one has in the bank in one financial year. In case one did not provide their PAN card details to the bank, then the bank deducts 20% of their interest income. So, make sure you provide the bank with your PAN details and get them linked to your account.

To tackle these interest income deductions, people apply for form 15G and form 15H declared by the Income Tax Department of India.

Difference between Form 15G and 15H

What are Form 15G and Form 15H?

In simple terms, the interest one earns through fixed deposits, and if that interest exceeds Rs 40,000 (Rs 50,000 for above 60yrs.) bank will deduct some amount as tax. But with the help of this form, one’s interest income/money is exempted from the deduction. 

Different banks and finance companies have their own 15G and 15H forms on their websites. One can go on these websites and fill the form. Here is a general sample of form 15G

Fill form 15G online

Step 1- Log in to your bank’s online portal.

Step 2- Click on the fixed deposits tab.

Step 3- On this page, you will have the option of generating forms 15G and 15H. Click on that link to open the form.

Step 4- Start filling the form. Keep your bank details and investment details handy. Make sure that you fill the form very carefully, properly, and without any error.

Form 15G

Highlights of Form 15G and Form 15H

•It is a self-declaration form to seek non-deduction of TDS on interest income (above exemption limit).

•All the rules related to this form are mentioned under Section 197A of the Income Tax Act, 1961.

•The current format of Form 15G and Form 15H was put in place by the Central Board of Direct Taxes (CBDT).

•To make use of this benefit, the declaration must be submitted in the first quarter of the financial year (if there are existing investments). For new investments, this form can be submitted before interest is credited.

Key Instructions while filling out Form 15G

I. Name should be written as given in the Permanent Account Number (PAN) card.

II. Keep your PAN number handy. In case you do not provide your PAN card details then the form would be declared invalid.

III. This form can be submitted by only an individual, not an organization or entity.

IV. Residential status has to be Indian resident as NRI are not applicable for this form.

V. Address and PIN number to be mentioned correctly.

VI. Provide a valid email ID and contact number for further communications.

VII. Marks “yes” for any previously assessed tax under the provisions of Income Tax Act,1961.

VIII. The previous year has to be selected as the financial year for which you are claiming non-deduction of TDS.

IX. Give the latest assessment year for which returns were assessed.

X. Estimated income for the declaration must be mentioned.

XI. Total estimated income for the financial year must also be mentioned.

XII. If one has already filled the form previously, then the details of the previous declaration and aggregate amount of income must be mentioned in the present declaration.

XIII. Provide investment account numbers like term deposit/life insurance policy number, etc.

XIV. Re-check the form carefully, avoid mistakes and submit.

This was the first part of the form which was to be filled by the deductee. The other part will be filled by the deductor i.e., the person who is going to deposit the tax deducted at source to government on behalf of the tax assessee.

After the form is submitted, CBDT provides a Unique Identification Number (UIN) for each self-declaration made. Deductor needs to fill in the details of the self-declaration along with UIN to the Income Tax Department.

This self-declaration is only for the particular financial year, so a fresh declaration form needs to be submitted for next year by the deductee.

Frequently asked questions regarding Form 15G

1. What will happen if I forget to submit the 15G form?

In this case scenario, you can do two things:

O Fill your Income Tax Return and claim your refund on TDS.

O Submit your form right away to avoid any other further complications in the current financial year.   

2. On what can I submit the 15G form?

Form 15G can be submitted in the following cases:

•TDS on interest income in bank fixed deposits.

•TDS on employee’s provident fund.

•TDS on interest from post office deposits.

•TDS on the interest income from bonds and debentures.

•TDS on rental income. 

3. What if I submit a false declaration on the 15G Form?

Under section 277 of the Income Tax Act, submission of a false declaration can land a person into prison anywhere from 6 months to 7 years if the declaration was provided to avoid taxation of more than Rs 1 lakh. For other cases, the imprisonment is anywhere from 3 months to 3 years.

tip icon
tip icon

tip icon
tip icon

Key takeaways

Blog sources

Have questions? We are here to help

20,000 HRs have!
Subscribe here.

What you will receive in your inbox?
  • Guides on employee insurance and wellness
  • Surveys and reports
  • Updates on free wellness webinars
  • Features from Champions of HR - A Thought Leadership Initiative