In India, Form 15G and Form 15H are used to prevent TDS deduction on interest earned during the financial year on fixed deposits, recurring deposits, or other similar investments. Form 15G is meant for individuals below 60 years of age, while Form 15H is for senior citizens aged 60 years and above. Both these forms help in ensuring that individuals with lower taxable incomes do not face unnecessary tax deductions on their earnings. Both these forms help in ensuring that individuals with lower taxable incomes do not face unnecessary tax deductions on their earnings. Below is the explanation as to how it works.
Suppose you have invested in FD in some bank worth Rs 5 lacs on interest rate @ 7% for 3 years, you will earn yearly interest 38573 Rs/-. If we consider that you don’t have any other income then this interest income is tax-free as it is below the tax slab limit, but the bank will deduct TDS @10 % and pay Rs. 3857 to the government as Income Tax and at year end bank will issue a TDS certificate to you. Then you have to file an income tax return and wait for the refund amount.
This is a regular process by the bank they will deduct TDS on interest earned on Fixed Deposits if it is above Rs. 10000 Per Annum. Once TDS is deducted one has to file an income tax return and wait for a refund. Form 15G or Form 15H helps to prevent this TDS deduction.
Note: – This form has to be submitted every year means if you have placed FD for 3 years then you have to furnish every year fresh 15 G/15 H to the bank.
Importance of 15G/15H form
To circumvent time-consuming procedure of Income Tax return filing and refund, you must attest that you do not have any income subject to taxation. The sole purpose of these forms is to provide written confirmation in duplicate that no tax is owed on the individual’s entire income. In this situation, the payer is not required to withhold any taxes. If your yearly earnings do not fall under the taxable bracket of income tax, you are advised to submit this form to the bank where you have opened this fixed deposit account.
First and foremost, filling out these forms can prevent unnecessary TDS deductions and guarantee individuals receive their complete income without deductions. This is especially advantageous for people who depend on interest earnings from their investments. Additionally, individuals can effectively manage their tax liabilities by avoiding TDS deductions, thus maintaining their liquidity. Finally, Form 15G/15H makes financial transactions easier by eliminating the need to reclaim deducted tax amounts.
Form 15G/15H is important for different groups of people. These forms are beneficial for salaried individuals, particularly those who receive extra interest income, to better handle their tax responsibilities. Form 15H is very beneficial for elderly individuals because it helps them maintain their retirement savings without any unwanted reductions. Likewise, NRIs can use these forms to avoid TDS deduction on their Indian earnings, effectively managing their tax strategy.
How to Submit Form 15G for EPF Withdrawal Online?
Eligibility Criteria
To submit Form 15G, an individual must fulfill certain criteria. Primarily, the individual’s total taxable income for the financial year must be below the taxable threshold. Similarly, Form 15H can be submitted by senior citizens if their tax liability on estimated total income is nil. These forms essentially declare that the individual’s total income is below the taxable limit and thus, no TDS should be deducted on their earnings.
How to Fill Form 15G/15H
Filling Form 15G or Form 15H is a straightforward process. Individuals need to download Form 15G or From 15H from respective bank’s website.
Individual needs to provide their personal details, including PAN, address, and financial year for which the declaration is made. Additionally, they must specify the nature of income and the estimated total income for the relevant financial year. The declaration must be signed and submitted to the concerned financial institution where the investment generating interest income is held.
Forms 15G/15H can be filed through either online or offline methods, as per the individual’s choice and the financial institution’s regulations. Many banks and financial institutions provide online facilities for submitting these forms, simplifying the process for taxpayers. However, individuals can also opt for the traditional offline submission method by physically submitting the forms to the respective branch or office.
Validity and Renewal
Once Form 15G/15H is submitted, it stays valid for the current financial year. Nonetheless, it is crucial to update these forms at the start of every fiscal year if the person’s financial situation stays the same. Not renewing the forms may result in TDS deductions that are avoidable, which goes against the reason for submitting them initially.
Consequences of Providing False Information
Including incorrect details in Form 15G/15H can lead to severe repercussions, both in terms of the law and financially. Should the Income Tax Department determine that the information given is inaccurate or deceptive, they have the authority to impose penalties on the individual. In addition, intentional fabrication could result in legal action, damaging the person’s financial standing.
Common Mistakes to Avoid
Individuals should be careful to avoid making common mistakes when filling out Form 15G/15H. These consist of providing inaccurate PAN information, incorrectly calculating total earnings, or not promptly renewing the forms. In order to prevent mistakes, people should thoroughly review all details before submitting and keep themselves informed about any updates to the form or submission procedure.
FAQs
What is the purpose of Form 15G/15H?
Form 15G/15H is used to declare that the individual’s income is below the taxable limit, thereby preventing TDS deduction on certain incomes.
Who can submit Form 15G?
Individuals below 60 years of age with total taxable income below the threshold limit can submit Form 15G.
What is the penalty for providing false information in Form 15G/15H?
Providing false information can lead to penalties imposed by the Income Tax Department, along with legal repercussions.
Can Form 15G/15H be submitted online?
Yes, many banks and financial institutions provide online facilities for submitting Form 15G/15H.
How often should Form 15G/15H be renewed?
Form 15G/15H should be renewed at the beginning of each financial year if the individual’s income situation remains unchanged.
Conclusion
In conclusion, Form 15G/15H plays a crucial role in the tax-saving strategy of individuals in India, particularly those with lower income levels. These forms assist individuals in preserving their income and managing their tax liabilities more efficiently by avoiding unnecessary TDS deduction. Taxpayers must grasp the eligibility conditions, submission procedures, and repercussions of providing incorrect details in order to fully benefit from Form 15G/15H.
