The Income Tax department has provided forms 15g and 15h to help individuals save tax on interest income from deposits and bank accounts and other specific income sources. Individuals need to submit these forms to the bank every year to avoid tax deduction at source on their interest income. These forms are applicable to individuals whose total income falls below the basic exemption limit. Lets look into more details around these forms.
About Form 15g
Individuals below the age of 60 years have to submit Form 15g to the bank. The form submission ensures, that TDS is not deducted on income like rental income, term deposit, etc. Hindu Undivided Family (HUF) can also submit this Form. An individual’s total income for the year should fall below the basic exemption limit, to be eligible for Form 15G TDS exemption. The form should be submitted every year, preferably at the start of the new financial year in April.
About Form 15h
An individual above the age of 60 years submits this self-declaration form. This submission ensures that tax is not deducted on income or interest earned from FD and other financial instruments in the financial year. The eligible limit for Form 15h TDS exemption is Rs 50,000 for senior citizens. The form should be submitted every year, preferably at the start of the new financial year in April.
Which income is covered in Form 15g & Form 15h tax exemption
Listed below are a few income types where individuals can get tax exemption by submitting Form 15g and 15h.
- Rental income: The rental income that exceeds the Rs 2,40,000 is subject to tax deduction. If the individual has a rental income but is below the exemption limit, they are eligible to submit Form 15G & Form 15H.
- Dividend income: Dividend income above Rs 5,000 is liable for tax deductions. TDS deductions can be avoided by submitting Form 15G/ 15H.
- EPF withdrawal: EPF withdrawal by an employee before 5 years of continuous service is subject to tax deductions. By submitting these forms, individuals can skip the tax liability of deduction on EPF withdrawal of Rs 50,000.
- Post Office deposits income: One can avoid tax deduction on Post Office deposit income by submitting form 15g/15h. This form has to submitted physically in your home branch post office.
- Corporate bonds income: Income from corporate bonds exceeding Rs 5,000 in an year is subject to tax deduction. Individuals can skip tax liability by submitting form 15g/15h.
- Life insurance receipts: Death benefit received from a life insurance policy exceeding Rs 1 lakh is subject to tax. Individuals can file form 15g/15h and skip this tax.
- Insurance commission: For insurance agents, if the commission earned in the financial year exceeds Rs 15,000, then TDS will be applicable. Individuals must submit form 15g/15h to avoid tax deductions if their income is below the limit.
How to submit Form 15g and 15h online?
Form 15g and 15h can be submitted online from the comfort of your home. You need to login to your internet banking portal and follow the provided instructions. Once the form is submitted, retain the confirmation receipt for future reference.
If you are going to receive dividend income, you can submit the forms online on the share transfer agent/depository site. Generally the dividend declaring company will send an email on your registered email address asking you to submit the forms. This email would contain the link for submission to the share transfer agent/depository.
To conclude, Form 15g and 15h are useful tools to avoid tax deduction on certain income types, provided your total income does not exceed the basic exemption limit.
