Form 15G & Form 15H: Usage and Eligibility for TDS in India

In India, taxpayers can use Form 15G and Form 15H to avoid Tax Deducted at Source (TDS) on certain incomes. These forms are especially useful for individuals whose income is below the taxable limit and who want to ensure that no unnecessary tax is deducted from their earnings.

What is Form 15G?

Form 15G is a self-declaration form that individuals (excluding companies and firms) can submit to request that their income not be subject to TDS. It is primarily used by individuals whose total income is below the taxable limit, and it applies to various types of income such as interest from fixed deposits, recurring deposits, and other investments.

Suggested read: What is Section 10 Income Tax Act?

Key Features of Form 15G

• Purpose: To ensure that no TDS is deducted if the total income is below the taxable limit.
• Eligibility: For individuals, Hindu Undivided Families (HUFs), and trusts.
• Submission: To be submitted to the bank or financial institution where the investment is made.
• Validity: Form 15G is valid for one financial year and must be submitted at the start of the financial year or at the time of investment.

Who is Eligible to Submit Form 15G?

• Age: Any resident individual below 60 years.
• Income: The total income must be below the basic exemption limit, which is ₹2.5 lakh for individuals below 60 years.
• Tax: The estimated total income for the financial year should be nil, meaning no tax liability should arise on the income.

Steps to Fill Form 15G

1. Basic Information: Enter name, PAN, financial year, and residential status.
2. Income Details: Provide details of the income for which TDS should not be deducted.
3. Declaration: Declare that the total income is below the taxable limit and that no tax is payable.
4. Signature: Sign the form before submitting it to the relevant institution.

Benefits of Submitting Form 15G

• Avoid TDS: Prevents unnecessary deduction of tax at source on interest income.
• Increased Cash Flow: Ensures higher liquidity as tax is not deducted at the source.
• Simplifies Tax Process: Reduces the need for filing for TDS refunds at the end of the financial year.

Introduction to Form 15H

Form 15H is similar to Form 15G but is specifically for senior citizens (individuals aged 60 years and above). It helps senior citizens avoid TDS on their income if their total income is below the taxable limit.

Differences Between Form 15G and Form 15H

• Age Eligibility: Form 15G is for individuals below 60 years, while Form 15H is for senior citizens aged 60 years and above.
• Tax Threshold: Both forms cater to individuals whose income is below the taxable limit, but the exemption limits differ based on age and applicable tax laws.

Validity of Form 15G

Form 15G is valid for one financial year. It needs to be submitted every financial year or at the time of investment to ensure continuous benefit from non-deduction of TDS.

Common Mistakes to Avoid When Filling Form 15G

• Incorrect PAN: Ensure the PAN is correctly entered as it is crucial for the form’s validity.
• Wrong Financial Year: Always mention the correct financial year for which the form is being submitted.
• Incomplete Information: Fill in all required fields completely and accurately.
• False Declaration: Do not submit Form 15G if the total income exceeds the taxable limit or if tax is payable, as this can lead to penalties.

Conclusion

Form 15G and Form 15H are valuable tools for eligible individuals to avoid TDS on their income, ensuring better cash flow and reducing the hassle of claiming refunds. By understanding the eligibility criteria, correctly filling out the forms, and avoiding common mistakes, taxpayers can efficiently manage their tax liabilities and benefit from these provisions.