In the present day, every
businessman must be attentive about Form 15G as well as Form 15H which are used
to avoid Tax Deducted at Source (TDS) deduction at the time of calculating the
amount of interest earned within that financial year. In this article, we will
discuss significant points to keep in mind during submission of Form 15G and
Form 15H.
What is Form 15G / 15H?
Significance of Form 15G
and Form 15H -
TDS is deducted on the
amount of interest paid, above Rs. 5,000 (if the deposit is made in private
firms) or Rs. 10,000 (if the deposit is made in bank). But, the payee can avoid
TDS by submitting Form 15G / 15H. As explained above the individual declares in
Form 15G / Form 15H that his sum total taxable income is less than the maximum
exemption limit, therefore the bank does not deduct TDS from interest payments
accrued to him.
Both these forms need to be filed in triplicate copy and the moment the payer (like bank, company or post office) receive them in their record, the total interest is ought to be compensated to the depositor with no TDS.
Thus submission of Form 15G benefits the individual in 2 ways:
Who can Submit Form 15G?
The following individuals
can submit form 15G if their taxable income is less than maximum exemption
limit chargeable to tax as per income tax slabs.
Who can Submit Form 15H?
An individual (resident
of India) who is above 60 years of age can submit Form 15H provided his / her
tax liability on the anticipated income is NIL for that financial year.
Difference between form
15G & Form 15H -
The basic circumstances
under which Form 15G / 15H are filed are approximately same yet there are few
differences that needs to be pointed out carefully. In normal course of action,
lots of taxpayers end up filing any one of these Forms while they are not
entitled to do so or vice-versa. Now let’s have a look at the major differences
between Form 15G and 15H:
When and Where to Submit
Form 15G / 15H?
There are certain points
that an individual needs to keep into consideration:
Other Relevant Points
about Form 15G / 15H -
HAPPY READING
HAPPY LEARNING
:)
What is Form 15G / 15H?
Form 15G / 15H is a
declaration which is submitted by the depositor to the bank in an approved form
where they assume that their sum total taxable income is less than the maximum
exemption limits i.e. Rs. 2,50,000 in Financial Year 2015-16. Consequently they
are not chargeable to income tax and the bank must not deduct TDS on the amount
of interest earned by them. This declaration contains personal details like
name, PAN and address along with the details of FDRs held at the bank branch.
However, for senior citizens, the obligatory Form to evade TDS is 15H.
Significance of Form 15G
and Form 15H -
TDS is deducted on the
amount of interest paid, above Rs. 5,000 (if the deposit is made in private
firms) or Rs. 10,000 (if the deposit is made in bank). But, the payee can avoid
TDS by submitting Form 15G / 15H. As explained above the individual declares in
Form 15G / Form 15H that his sum total taxable income is less than the maximum
exemption limit, therefore the bank does not deduct TDS from interest payments
accrued to him. Both these forms need to be filed in triplicate copy and the moment the payer (like bank, company or post office) receive them in their record, the total interest is ought to be compensated to the depositor with no TDS.
Thus submission of Form 15G benefits the individual in 2 ways:
- He
gets a chance to avoid TDS from Interest payments.
- Since
the person who is submitting Form 15G has income below taxable limit and
further he or she doesn’t expect or is entitled to any refund as no TDS
gets deducted (as he or she has filed Form 15G), he is not forcibly
required to e-file Income Tax Return.
Who can Submit Form 15G?
The following individuals
can submit form 15G if their taxable income is less than maximum exemption
limit chargeable to tax as per income tax slabs.- An
individual below 60 years of age, who is a resident of India is may submit
Form 15G. Subsequently, an NRI is also not liable to submit this Form.
- HUF
(Hindu Undivided Family).
Who can Submit Form 15H?
An individual (resident
of India) who is above 60 years of age can submit Form 15H provided his / her
tax liability on the anticipated income is NIL for that financial year.
Difference between form
15G & Form 15H -
The basic circumstances
under which Form 15G / 15H are filed are approximately same yet there are few
differences that needs to be pointed out carefully. In normal course of action,
lots of taxpayers end up filing any one of these Forms while they are not
entitled to do so or vice-versa. Now let’s have a look at the major differences
between Form 15G and 15H:- Form
15G is basically meant for non-senior citizens below 65 years of age
whereas 15H is intended for senior citizens (above 60 years of age).
- Form
15G may be submitted by HUF’s as well but Form 15H can only be submitted
by an Individual above 60 years of age.
- Form15G
cannot actually be filed by any individual whose income through interest
on securities / interest apart from “interest on securities” goes beyond
the pertinent essential exemption limit.
When and Where to Submit
Form 15G / 15H?
There are certain points
that an individual needs to keep into consideration: - Form
15H must be submitted to the Banker / Company, where the deposit has been
made. For instance, if you have deposited in 3 ICICI bank branches
Rs.100000 each then you need to submit Form 15H to each of these branches.
Submission of this Form is also necessary before 1st payment of interest.
Though it is not necessary but it avoids TDS deduction.
- The
Forms must be submitted in Triplicate. The First copy of it is passed on
to the Income Tax (IT) Department, the second copy is retained with the
bank branch and the 3rd copy is for your own records which serves as
acknowledgement from the bank branch for receipt of form.
- The
form must be preferably submitted at the starting of the financial year or
even during the period of deposit itself in order to avoid a state where
the payer has by now deducted the tax prior to its receipt.
Other Relevant Points
about Form 15G / 15H -
- Permanent
Account Number is Necessary: An
individual needs to make sure that he or she submits the Permanent Account
Number (PAN) detailing to the bank when submitting Form 15G / 15H. If in
any case, an individual fails to provide PAN details to the bank, then the
bank is liable to deduct TDS at 20% against the relevant rate of 10% even
if he or she has submitted the Form 15G / 15H.
- Avoids
TDS but does not Save Tax: Form 15G
/ 15H assists in evading TDS but it does not facilitate in saving taxes.
- Separate
Form for each branch: If an individual is
making Fixed Deposit (FD) in diverse branches of the same bank, then it is
mandatory to submit these forms at each branch where deposit has been
done.
- To
be submitted every year: It is
important to note that new set of these Form are mandatory to be filed
every year but the eligibility condition needs to be examined prior to its
furnishing. These Forms are valid for that financial year in which it has
been furnished. The assessee ought to submit the Forms if he or she
desires to receive the interest devoid of deduction of tax at source.
- False
Declaration: Any kind of false or artificial declaration
is sure to attract penalty u/s 277 and thus it is advisable that an
individual must not sign it blindly. The false declarations are liable for
hearing which may range between 3 months - 7 years owing to the quantum of
non-payment. Moreover, the taxpayer can also be penalized with painstaking
imprisonment not considering the fact that such false details were
provided deliberately or not deliberately since Ignorance of Law is no
defense.
- Acknowledgement
Form: Make sure to acquire acknowledgement for Form
15G / 15H when submitting it. Hence, it is recommended to submit the Form
personally in order to ensure appropriate acknowledgement.
HAPPY READING
HAPPY LEARNING
:)
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