TDS, or Tax Deducted at Source, is a term you might frequently encounter, particularly in relation to your income and career.
In India, financial institutions deduct TDS when an individual’s annual income exceeds Rs 40,000 (or Rs 50,000 for senior citizens). This deduction is mandated under the Income Tax Act of 1961. However, if your income falls below the taxable threshold, there are steps you can take to prevent unnecessary TDS deductions by your bank.
Forms 15G and 15H are crucial for this purpose. By submitting these forms, you request the bank not to deduct TDS, provided your income is below the taxable limit. To know more about the difference between 15G Vs 15H form, keep reading.
What are Form 15G and Form 15H?
Individuals use Forms 15G and 15H to state that their annual taxable income falls within the tax-exempt limit. For senior citizens (those above the age of 60), this limit is Rs. 2,50,000, and for those under 60, it is Rs. 3,00,000. These forms can be collected from the Income Tax website, insurance companies, and other financial institutions.
1. Form 15G
Form 15G is a self-declaration form applicable to individuals under 60 years of age and Hindu Undivided Families (HUFs). By submitting this form, you declare that your total income is below the taxable limit, preventing financial institutions and other entities from deducting TDS on your earnings. This form is primarily used to avoid TDS deductions on passive income sources like interest from savings accounts, fixed deposits, or rental income.
2. Form 15H
Form 15H serves a similar purpose but is specifically for individuals aged 60 and above. Like Form 15G, it is submitted to financial institutions to prevent the deduction of TDS on passive income sources, including fixed deposits, rental income, and interest. Form 15H allows senior citizens to manage their taxes effectively and avoid unnecessary deductions if their income falls below the taxable threshold.
What are the Eligibility Criteria for Submitting Forms 15G and 15H?
To be able to submit Forms 15G and 15H, you have to meet specific criteria. These differ based on which form you are using and include:
1. Eligibility criteria for 15G
This form can be used by individuals under the age of 60 or by Hindu Undivided Families (HUF). Their income must fall within the tax-exempt bracket, and individuals must be citizens and residents of India. The form can only be submitted by individuals or HUFs, not by organisations and firms, and they must submit their PAN cards to be eligible. Form 15G is valid for one financial year.
2. Eligibility criteria for 15H
While its features are similar to Form 15G, Form 15H is meant for senior citizens over 60. The individual’s income should be below the taxable limit. The individual must also be a resident of India to be eligible to apply. Individuals are required to submit their PAN card as well. Form 15H is valid for one financial year.
Forms 15G vs. 15H: How Do They Differ?
Here are the main differences between 15G and 15H:
Feature
Form 15G
Form 15H
Eligibility
Individuals below the age of 60 and Hindu Undivided Families (HUFs) are eligible.
Individuals over the age of 60 (i.e., senior citizens) are eligible to submit this form.
Taxable income limit
The total taxable income of the individual should not be over Rs. 2,50,000.
The total taxable income should be Rs. 3,00,000 or less. For super senior citizens (individuals above the age of 80), this limit is Rs. 5,00,000.
Interest income limit
The interest income should not be more than the basic exemption limit of Rs. 2,50,000.
The interest should not exceed the basic exemption limit of Rs. 3,00,000 for senior citizens.
When and Where can Forms 15G and 15H be Submitted?
The best time to submit these forms is at the start of the financial year. It ensures that the form is processed as soon as possible and that no TDS is deducted from your income. Some financial institutions allow you to submit it through their websites. While they are typically submitted for term deposit interest, there are other situations where they can be submitted as well. These include:
– Post office deposits: Post office fixed and recurring deposits are eligible for TDS deductions on interest income. To apply for TDS relief, you must meet the eligibility criteria for 15G or 15H, and the interest income must also meet the required limits.
– Corporate bonds: TDS is deducted from corporate bonds if the annual interest income generated from them exceeds Rs. 5,000. However, if you are eligible for 15G or 15H, you can submit the form to request relief from TDS deductions on bond payouts.
– Employees Provident Funds (EPF): If you withdraw your EPF balance before 5 years, and if the balance exceeds Rs. 50,000, TDS is deducted from the amount. However, if you meet the eligibility criteria for Forms 15G and 15H, you can submit these forms for relief from TDS.
– Rental income: If rent exceeds Rs. 2,40,000 in a year, TDS is deducted from the amount and submitted to the necessary authorities. However, if the eligibility criteria are met, you can submit Form 15G or Form 15H for relief from these deductions.
Wrapping Up
TDS can have a significant impact on your finances. For relief from TDS deductions, it is crucial to submit Forms 15G and 15H in a timely manner. Additionally, it is essential to ensure that you don’t submit these forms unless you meet the eligibility criteria. Incorrect or falsified information can lead to penalties, including fines or even imprisonment in some cases.
Taking charge of your finances can seem overwhelming. If you want to start your journey to attain your economic goals, Tata Capital’s specialists can provide you with expert guidance and help you create a plan.
20 November 2024
5 mins read
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