What is Form 15G and Form 15H ?
Form 15G and Form 15H are self declaration forms that need to be submitted to avoid TDS deduction from a person’s income where the total income stands below the taxable limit as applicable in the case of men, women and senior citizens. In other words, Form 15G and Form 15H are self declaration forms to be furnished if total taxable income of a person is going to be less than the permissible limits. Form 15H is for senior citizens and Form 15G is for other individuals. However, these forms are not applicable for Non-Residential Indians (NRI’s).
Form 15H can be submitted by a person who is Resident Individuals above 60 yrs of age (w.e.f 01/04/2011). An important point here is that a person should have not have paid any tax in the previous year . So only if one didn’t have any tax liability in the previous year can submit Form 15H . It should be submitted at the start of the year itself.
Form 15G has the same purpose as Form 15H , just that this form should be submitted by a person below 60 yrs old (w.e.f 01/04/2011). This also includes the Hindu Undivided Family(HUF).
Lets take a example, Mrs Verma is a house wife, aged 45 and she has a Fixed Deposit of Rs 2,00,000 /-.
She is earning interest @ 10%. During the last year she has earned interest of Rs 20,000/-.
Mrs Verma’s Bank is under obligation to deduct TDS @ 10.3% (20.6% in case she has not submitted PAN number to the bank) i.e TDS of Rs 2,060/- will be deducted by bank.
How can she save the TDS on her Fixed Deposit ?
To save the TDS on her Fixed Deposit, Mrs Verma need to sign and submit Form 15G to the bank. Form 15G is the declaration to the Income tax department, that My (Mrs Verma’s) total income is less than the total taxable limit (Rs 2,00,000/- for Financial year 2012-13).
If Mrs Verma’s age was above 60 yrs of age, then she would need to sign and submit Form 15H to the bank.
What happens in case of Non Resident Indians (NRI’s)
NRI’s are not eligible to submit the above mentioned Form 15H and Form 15G but that does not mean that they have no option. NRI’s can apply to Income Tax Department proving the deduction of TDS is more than their tax liability and obtain exemption certificate which can then be submitted to payer of funds to avoid TDS deduction.