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Earning income is good – paying taxes is better … have you ever found some one saying that ? Perhaps not. People would want to prevent paying tax to the extent possible – some by tax evasion (which is illegal) and other by tax planning. There is another category of people who generally are not cognizant of the fact that tax is being deducted from their hard earned money even though they are not required to pay any tax.  You must be wondering that what I wrote sounds contradictory – if one is not required to pay tax, why would tax be deducted from their earnings.

 

TDS or Tax Deducted At Source

One of the most common ways a person earns income (other than via salary and business) is via interest on deposits from Banks. Banks are required to deduct an upfront tax under section 194A of Income Tax Act. The three categories of interest being earned from a bank are :

1. Interest on Saving account – no TDS is deductable on interest provided to such accounts even though such interest income is chargeable to tax. A new tax rebate was recently introducted in 2012 whereby saving bank interest income upto Rs. 10,000 is not subject to tax.

2. Interest on Recurring Deposit (RD) – just like Saving bank account, no TDS is deductable on RD interest even though RD interest is taxable.

3. Interest on Fixed Deposits (FD) – FD interest like other forms of interest is taxable and is liable for TDS deduction by Banks.

A bank would deduct TDS if total interest paid or accrued to a customer in a year exceeds Rs. 10,000. It is important to note :

a. Accrued Interest – even though the interest is not paid, it would be subject to TDS. For example, if you have opened a 5 year FD of Rs. 200,000 @ 10% interest whereby interest shall be paid on maturity. Even though you shall not be paid interest on a yearly basis, TDS shall be deducted on the interest accrued. In this case, 200,000 @ 10% = Rs. 20,000 shall be interest for the first year. Out of Rs. 20,000, 10% TDS (i.e. Rs. 2000) shall be deducted and remaining Rs. 18,000 shall added to your FD account. On maturity, you would find that the total interest paid out to you shall be reduced by around 10% owing to TDS.

b. A Customer – Before Core Banking Solution (CBS) was implemented in the banks to integrate all branches across the country via computerisation, a branch was not aware of customer details of any other branch. So for example if a customer ‘A’ opened one FD in SBI’s Branch 1 of Delhi city and another FD in SBI’s Branch 2 of same city (Delhi), both Branch 1 & Branch 2 would not be able to identify the total interest being paid out to Customer ‘A’. However, with CBS implementation, all branches of a bank across the country can now identify if Customer A has any other FD in any other branch of the same bank and hence deduct TDS if total interest payouts to Customer A exceed Rs. 10,000 per year.

 

But What if I am not Subject To Tax ??

This is a million dollar question ! Often the people who are not subject to Tax get penalised with mandatory TDS if the total interest income being paid out to them exceed Rs. 10,000 from the same bank. This causes unnecessary hardships whereby the investor would now need to file a tax return in order to claim a refund of the TDS. In order to prevent such hardships, Income Tax Act has got provisions whereby a person can submit a declaration with the respective Bank in prescribed Forms (15G and 15H). Once the bank has received such declaration, they would not deduct TDS FOR THAT YEAR ONLY.

It is important to note that this not a one time exercise for the duration of the Fixed Deposit. The form needs to be submitted every year to prevent the bank from deducting TDS for that year. I believe that the rationale for this form to be submitted on a yearly basis is – the income level of a person can change from one year to another year and it may not be practical to declare your income levels for next couple of years. Lets discuss these two forms individually.

 

Form 15 G (Free Download)

This form is meant for general investors who want to declare to the bank that their income from all sources is less than minimum amount subject to tax. At the time of writing this article, this amount is Rs. 200,000.

Form 15H (Free Download)

This form is similar to Form 15G but is meant for investors who are more than 65 years of age. This form also requires the investor to declare that his total income is less than minimum amount subject to tax (i.e. Rs. 250,000).

 

Other Measures to Prevent TDS

The law requires a bank to deduct TDS from a customer’s income if the total interest paid / payable by THE bank for FD is greater than Rs. 10,000. However, if the interest paid / payable by other banks to the same customer is greater than Rs. 10,000, the bank is not liable to deduct TDS as long as interest paid by the bank is within Rs. 10,000. This forms a genesis to prevent TDS being deducted on your interest income. If you perceive that the total FD interest shall be more than Rs. 10K, then you may want to split your FDs with multiple banks. For example, if you have Rs. 300,000 which you want to invest in FD. If you open a FD with a single bank, the interest payable would be approx Rs. 25-30K per year and hence inviting TDS deduction (as interest is more than 10K). To prevent TDS, you may want to split it with 3 different banks (not 3 different branches of the same bank).

Conclusion

Money is hard earned and hence every attempt should be made to plan tax and take all opportunities to prevent any tax deductions, specially even more when a person is not required to pay any tax. One such mode is via Form 15G and 15H which are required to be submitted on an annual basis to prevent tax being deducted where an investor is not required to pay any tax.  Investors should really make sure that every year they visit the branch of their banks and submit such a form if they are not required to pay any tax and the total interest being paid out or accrued to them from the bank exceeds Rs. 10,000 per year.

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52 Responses to What is Form 15 H and 15G – TDS Deduction ?

  1. jaiswal amrish says:

    sir yey bataiyey ki saving account m 100000 rs say jyada ka balance rakhney par tds deducted hoga yaa intt recd is higher rs 10000.
    amrishrbl@gmail.com

  2. Amrish,
    Saving account ki interest par TDS deduct nahein hota hai. Hence don’t worry.

  3. Sir
    I am having multi FD worth around ten lacs.
    I have submitted Form 15G well in time to save my TDS.
    Now let me know what more will have to be done by me in order to come out clean as I dont want to become a Tax defaulter.
    I am a responsible citizen of India.
    But still I am unemployed & I run my family from the monthly interests that I get from my FDs.
    So tell me whether I will have to again file Tax returns.
    My mail id is luv2bapi@yahoo.co.in

  4. Hi Bappi
    If your total income is less than 2 lacs, then you don’t need to do any thing more.

  5. EH VICTORIA says:

    Wonderful article, Very useful one for an non-financial layman. Appreciate whoever written this article.

  6. Shri says:

    Are the 15H/G form submitted to income tax department or the banks keep it for themselves. Because if you submit different 15H/G for to different banks and if each bank sends it to IT Department. Wont the IT department know that you are not paying TDS and liable to pay income tax.

    Do the banks send all the 15H/G forms to IT Department?

  7. Jay says:

    Hi,

    I have a saving’s account and unemployed. I am getting financial help from abroad of $1000/month. My interest earned is above Rs.10,000. Am i qualified for Form 15g?

    Jay

  8. Shri
    I believe that the forms are kept by Banks in hard copy. They may just end up reporting the names of people who have filed form 15 G/H to income tax act.

  9. Jay
    It depends of you are receiving the financial help from your blood relative, then that help can be considered as a gift and hence not liable for income tax. In such case if your taxable income from all other sources (if any) is less than 2 lacs, then you can file Form 15G/H

  10. Neha says:

    Dear Sir
    I am working overseas and doing remittance to icici savings account in India.(I don not have NRE/NRO acct).
    I have no income in India except for the interest earned on FD, which I believe will be more than 10k.
    Also I am making maximum remittances to this account.
    what is my tax status , will TDS apply on my FD?
    how can I avoid tax. Please suggest.

    Thanks,
    Neha

  11. Neha,
    Legally what you are doing is not correct. Any interest over 10K per year will attract TDS for resident FDs.

    You could easily open a NRE account and open FDs there tax free. This in my opinion is the best and safest option for you.

  12. Vicky says:

    Hello,

    Does 15G is branch specific? In today’s online world(I guess, where ever you open FD, those are linked to customer ID in online), if I opened 1 FD for 20L and submitted 15G for that. Can I open another FD for 20L for the same bank at different branch and submit 15G for this?

    Thanks..

  13. Vicky you are correct. It is Bank specific and not Branch specific. Hence if you need to submit 15 G/H once per year per bank.

  14. Neha says:

    Hello,
    Thank you for your advise, really helpful!
    Could you suggest, if transferring money to Indian saving account is not correct legally or creating resident FDs is not appropriate.

    Thanks,
    Neha

  15. Neha,
    Both of them are not legally correct. Creating resident FD or having a resident saving account is meant of Resident Indians only.

  16. abdul says:

    Dear, Good Mornings,
    Our Last Year Total Income 1,61,000 & Cut the 10% TDS
    Tell me what is this process Return File & i am checking online total tds cut website name any process tell me

    Last Date TDS Retun & online process tell me i am checking last year total TDS Cut 2102-13

    09024075139

  17. Sorry Abdul, I can’t understand your query in full.
    1. You need to file the appropriate return based upon the types of income you have.
    2. You can file the return at any time for 2012-13 year as there is no specific deadline of 31 July 2013 for your case as no tax is due.

  18. revathy says:

    Sir,

    I have a resident savings account –

    I see that there is a TDS deducted on my accrued savings interest and also on some FD returns that i got last year. i thought TDS is applied only after the return income crosses 10,000 exemption – or do i need to file a tax return to get that back.

    now,how is the TDS % calculated for residents..is it based on the income slab. but the bank doesnt know about my income and so on what basis will they arrive at my TDS %

  19. Revathy,
    There is no TDS cut on Saving interest. FD interest attracts TDS beyond 10K. Unless you submit Form 15 G/H, bank will deduct TDS on your FD interest. There is no slab based TDS computation. The bank will deduct TDS on a flat basis of 10% on entire interest if it crosses 10K level.

    If TDS has been deducted and you do not need to pay tax, then you have to file tax return to get the refund.

  20. Ryan says:

    I want to know if someone has an Interest Income of more than 3 Lakhs (submitted 15H Form) and is filing for IT returns for the First time, Will he get a scrutiny Notice?

  21. Sankarson bhattacharya says:

    hi sir

    i have opened on FD of INR1000000 in a nationalized bank through there branch office & submit from 15G to that bank branch office, now i have no extra income & now i want to fixed more INR100000 in same branch but through internet banking (etda online,last time i apply through bank) then should i need to submit from 15G again??? as it’s open online..
    please advice!!

  22. Ryan,
    If submit your return timely, the chances of scrutiny Notice are less. Unless you have tax saving investments, you would be liable to tax with a 3 lac income in India.

  23. Sankarson,
    All your FDs (both online and offline) in a bank will be linked to the same customer ID. You can provide one declaration for all your FDs linked to one Customer ID. Just confirm with the branch if the customer ID is the same.

  24. bhaskar says:

    Hi Sir,
    My mother is getting pension of my father around rs 23000 P/M and have a small FD.
    Can she fill the 15G form.

    Thank you

  25. Bhaskar,
    If your mother’s total income including FD proceeds is not going be taxable, then she can file Form 15G.

  26. RIKI says:

    Hello Sir,

    I have a FD of Rs10000/- in a SBI branch, and i have still unemployed. So, is it necessary to submit 15G form in the branch??

  27. Sebanti Roy says:

    Do we need to submit 15G form for RD also?

  28. Hi Riki,
    You don’t need to submit 15G form to the branch for a 10K FD. The interest on it would be less than Rs. 1K.

  29. Sebanti
    Yes, if the interest amount goes beyond the threshold value.

  30. chandrani says:

    Hello Sir,
    I have just opened a FD of Rs.200000 @9.1% for 1 year online. 218831 is the maturity amount. I guess I need to submit Form 15G as my interest is more than 10000/- p.a. I am a Housewife. Am I correct sir?

  31. Chandrani,
    Correct. Please submit it before the banks deduct TDS.

  32. Thomas Dohling says:

    Why is the Income Tax Dept. not accepting exemption on interest amount of up to Rs.10000 paid to me u/s 80TTA but demanding Rs.4309 on the same even after I have paid tax on the amount over and above Rs.10000?

  33. Thomas,
    Did you file a tax return to gain the tax exemption ? They can not ask for tax on something which is exempted.

  34. Amit says:

    Very nice lines.
    Thanks a lot.
    Very nice information.

  35. hi i m rupesh i have done fd of rs 2000000 for 8 year in bank of baroda under double dhamaka scheme .my money get double in 8 yeras on matururity .i m 67 year old .my income is nil . i m retired and getting 1000 rs pension per month. guide me to save my interst money on maturity
    if i subbmit 15 h form can i save my tds .how much money i will get if tds deducted.

  36. Ranajit says:

    Read the below comments, Please tell me after a bank deducts TDS on maturity(Booked and matured in same financial year), May I submit 15G in the same financial year to get re-imbursement (after Bank deducts TDS)?

    Thanks a lot
    ===================================
    chandrani says:
    April 8, 2014 at 8:19 am

    Hello Sir,
    I have just opened a FD of Rs.200000 @9.1% for 1 year online. 218831 is the maturity amount. I guess I need to submit Form 15G as my interest is more than 10000/- p.a. I am a Housewife. Am I correct sir?

    Banyan Financial Advisors says:
    April 13, 2014 at 8:41 am

    Chandrani,
    Correct. Please submit it before the banks deduct TDS.

  37. Poonam says:

    I came to Finland on Jan 18 2014 and would be going back to India on March 20th 2015. For the Indian FY 2013 to 2014, i have already paid income taxes in India and Finland.

    I have recently transferred ‘x’ lakh to my Indian regular savings account in Jan 2015.

    I have heard that it would incur some taxes. Is that true ? how much % ? Is the tax calculated on the money transferred or on the interest earned ?

    I believe i am not tax resident in India for FY 2014-2015. kindly confirm this as well

    I wasn’t aware of NRE account so i transferred to normal savings account in India.

    Waiting for reply. Any help would be really appreciated !

    Many thanks Poonam

  38. Rupesh
    You are in the taxable bracket and hence all of your interest income should be taxable. Interest on FDs are taxed on annual basis irrespective of whether you defer the payout to maturity. If you dont file TDS exemption form, the bank will deduct TDS annually to the tune of approx Rs. 20,000. Please visit your branch and file Form 15H annually.

  39. Ranajit,
    Once the bank has deducted TDS, you can not get this refunded from the bank. The only way is to file a tax return after the end of the year and claim refund.

  40. Chandrasekhar Panda says:

    Dear Concern,

    I have 3 fixed deposite in SBI Bhubaneswar Orissa can i sumbit my 15G in sbi braches of hyderabad, Telangana.

  41. Poonam, you will be a non-resident for the FY 2014-15. There are no taxes to pay on remittance of funds to your saving account. However ideally you should have remitted it to your NRE account only.

  42. Hi Chandrasekhar
    These days the banks have core banking. Hence any branch should be able to accept your Form.

  43. Patel says:

    Hii…i have NRE saving acc in india and i have around 3-4 L fd. Do i need to subbmit 15G/H form for TDS waiver ?? All my earning are abroad and i dont have any current or saving account in india, only NRE saving account for my FD interest.

  44. Hi Patel,
    You do not need to submit Form 15 G/H for NRE FD tax interest as they are tax free.

  45. shri says:

    Hello sir,
    i m shri working invidiously in Forex international market as adviser ,but i did registered firm now .ony i m working single .do i need to register firm ? yearly income we got 8L .so how much will tax on invidiously income ,

  46. Hi Shri,
    Registration of a firm is more of an indirect tax requirements rather than Income Tax. If you have a business and have got yearly income of 8L, you will have an option to deduct expenses which you may have incurred in the course of earning such income. Only net income should be taxable. If you are operating the business as an individual, the tax liability will be similar to an Individual.

  47. J.S. Mago says:

    My wife is unemployed and having a fixed deposit in a nationalized bank around 2.5 lacs and Rs. 1.0 lacs in saving account in other bank. She received this amount from her parents from time to time . Is she required pan card and also have to submit 15g/15h form to bank to save tax.

  48. J.S. Mago,
    If you don’t have a PAN, you will not be able to subject Form 15G. Bank will deduct TDS at a higher rate if PAN is not submitted with them (if the interest crosses 10K per year). Infact most banks will not open FDs beyond Rs. 50K if PAN is not provided. I would suggest you to get a PAN for her and communicate it to the bank. There after on a yearly basis submit Form 15G/H.

  49. Abhimanyu says:

    Sir, I had submitted form 15G in Sept, 2014, when shall I go again & fill the form again? What is the validity of this form from the day form is submitted?

  50. Abhimanyu,
    You need to fill the form just at start of the next financial year. So, I would suggest you to visit your bank in April 2015.

  51. ravi agrawal says:

    i am working in a bank. i want to say that our customer has submited 15g/h
    but system has deducted tds in his fd. but i want to tell you that his fdr in
    our branch is more than 18 lack.kya 15 g/h 15 lac ke upar bhi kam karta hai

  52. Ravi – We are not aware of any limit on the Form 15G/H. However, the form is submitted if the person’s estimated income would be less than the minimum threshold, i.e. 2.5 lacs. Even with 18 lacs, this limit may not be crossed. Hence, looks to me either the form was incorrectly processed or your bank’s system had a flaw.

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