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Budget 2021 update :It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
Forms 15G & 15H :What can you do to make sure bank does not deduct TDS on interest, if your total income is not taxable? Banks have to deduct TDS when your interest income is more than Rs.40,000 in a year (prior to FY 2019-20, the limit was Rs 10,000). The bank adds deposits held in all its branches to calculate this limit. But if your total income is below the taxable limit, you can submit Form 15G and 15H to the bank requesting them not to deduct any TDS.
Form 15G and 15H submitted for FY 2019-20 will be valid up to 30 June 2020 (First Quarter of FY 2020-21).
In this article, we cover the following
FORM 15G | FORM 15H |
Resident Individual or HUF or trust or any other assessee but not a company or a firm with age less than 60 years | Resident Individual with an age 60 years or more i.e Senior citizen. |
Tax calculated on your total income is Nil | Tax calculated on your Total Income is Nil |
The total interest income subject for the year is less than the basic exemption limit of that year, which is Rs.2.5 lakh for financial year 2020-21 (AY 2021-22) | |
Please note that benefits of Form 15G and 15H cannot be claimed by Non residents. |
Age | 50 years | 21 years | 65 years | 68 years |
Salary | Rs. 1,80,000 | – | – | – |
Pension | – | – | Rs. 1,00,000 | – |
FD interest income | Rs. 85,000 | Rs. 2,60,000 | Rs. 1,80,000 | Rs. 3,30,000 |
Total Income before allowing section 80 Deductions | Rs. 2,65,000 | Rs. 2,60,000 | Rs. 2,80,000 | Rs. 3,30,000 |
Deductions under section 80 | Rs. 45,000 | Rs. 30,000 | Rs. 10,000 | Rs. 55,000 |
Taxable income | Rs. 2,20,000 | Rs. 2,30,000 | Rs. 2,70,000 | Rs. 2,75,000 |
Minimum exempt income | Rs. 2,50,000 | Rs. 2,50,000 | Rs. 3,00,000 | Rs. 3,00,000 |
Eligible to submit Form 15G | Yes | No | No | No |
Eligible to submit Form 15H | No | No | Yes | Yes |
Age less than 60 year | Yes | Yes | No | No |
Age more than 60 year | No | No | Yes | Yes |
Tax on total income is Nil | Yes | Yes | Yes | Yes |
Interest income is less than basic exemption limit | Yes | No | N.A. | N.A. |
Form to be submitted | Form 15G | Cannot Submit | Form 15H | Form 15H |
In above example-
A lot of taxpayers forget to submit Form 15G and Form 15H on time. In such a situation, the bank might have already deducted the TDS. Based on your situation, you can do any of the following.
The only way to seek refund of excess TDS deducted is by filing your income tax return. Banks or other deductors cannot refund TDS to you, since they have already deposited it to the income tax department. Income tax department will refund excess TDS, after you file an income tax return.
Most banks deduct TDS every quarter. If you forget to submit Form 15G or Form 15H, don’t worry. Submit it at the earliest so that no TDS is deducted for the remaining financial year. To claim refund of excess TDS deducted, start filing your return on ClearTax
If you are a TDS deductor, the Income-tax Act requires you to allot a Unique Identification Number or UIN to everyone who submits the Form 15G/Form 15H. You must file a statement of Form 15G/Form 15H on a quarterly basis and must retain these forms for 7 years.
Do not submit Form 15G, if your income has to clubbed with someone else. Interest income from an FD for a non-earning spouse or a child has to be clubbed with the income of the depositor. In such a case Form 15G is not valid. PAN of the depositor is mandatory and TDS should be deducted in the name of the depositor.