Most entities, such as banks, EPFO (Employees’ Provident Fund Organisation), or even companies, deduct TDS while paying you interest or dividends. This is because these incomes are fully taxable, and the entities are responsible for deducting tax while making such payments and paying the same to the government.
However, if your total taxable income in the entire year falls below the basic exemption limit, which is ₹2,50,000, you can avoid TDS on such incomes by filing Form 15G/15H.
What are Form 15G and Form 15H?
These are self-declaration forms where you inform entities like banks that your income falls below the basic exemption limit, and hence, TDS should not be deducted.
Both forms serve the same purpose, but the applicability differs based on age. Form 15G applies to individuals who are below 60 years of age and HUFs, whereas Form 15H is applicable to senior citizens, i.e., those above 60 years of age.
Key considerations:
- These forms are only applicable to resident individuals and not NRIs.
- You can only file if your total income is below the basic exemption limit.
- In the case of interest income, Form 15H can be submitted by senior citizens, even if their interest income surpasses the basic tax exemption threshold, provided their taxable income, after accounting for deductions, remains below the exemption limit.
When should you submit the form?
Form 15G/15H should be submitted at the start of the financial year so that the entity does not deduct TDS on any payment made in the entire year.
Which entities can you submit Form 15G/15H to?
- Banks, for non-deduction of TDS on interest from FDs/RDs or savings account
- EPFO, for non-deduction of TDS on PF withdrawal (if withdrawn before 5 years of service)
- Issuing entity, for non-deduction of TDS on interest from corporate bonds
- Issuing entity, for non-deduction of TDS on dividend
- Tenant, for non-deduction of TDS on rent.
What if you forget to submit Form 15G/15H?
In case you forget to submit the form before the start of a financial year, here’s what you can do.
First, file the form as soon as possible. Most companies/banks deduct TDS on a quarterly basis. Hence, by submitting Form 15G, you can avoid TDS deduction for the remaining financial year.
Second, file your ITR and claim a refund. If TDS is already deducted, the only way to get a refund is by filing your income tax return. Once you file your ITR, the TDS will be refunded to you by the income tax department.
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