Form 15G and Form 15H: How to Save TDS on Interest Income

When it comes to saving taxes on your interest income, Form 15G and Form 15H are two important documents that come into play. These forms allow individuals to avoid TDS (Tax Deducted at Source) on their interest income, which can be a significant saving for many taxpayers. In this blog, we will discuss what Form 15G and Form 15H are, who is eligible to submit them, and how to fill them out to save TDS on interest income.

What is Form 15G and Form 15H?

Form 15G and Form 15H are self-declaration forms that individuals can submit to banks and other financial institutions to avoid TDS on their interest income. TDS is a tax that is deducted at the source by banks and other financial institutions on interest income above a certain threshold. By submitting Form 15G or Form 15H, individuals can declare that their total income is below the taxable limit and hence, no TDS is required to be deducted on the interest income earned.

Who is eligible to submit Form 15G and Form 15H?

Form 15G can be submitted by individuals who are below 60 years of age and have a total income below the taxable limit (currently set at Rs. 2.5 lakh). Similarly, Form 15H can be submitted by senior citizens (aged 60 years or above) who have a total income below the taxable limit (currently set at Rs. 3 lakh). It is important to note that both Form 15G and Form 15H can only be submitted by individuals who are Indian residents.

How to fill out Form 15G and Form 15H?

Both Form 15G and Form 15H require individuals to provide basic personal and income details, including name, address, PAN number, and total income for the financial year. Individuals are also required to declare that they are eligible to submit the form and that the information provided is true and correct.

It is important to ensure that all the information provided in the form is accurate, as any incorrect information can lead to penalties and legal implications. Additionally, individuals are required to submit Form 15G and Form 15H separately for each financial institution where they hold accounts that earn interest income.

Objectives of FROM 15G and FROM 15H:

The primary objective of Form 15G and Form 15H is to help individuals avoid Tax Deducted at Source (TDS) on their interest income, provided that their total income falls below the taxable limit set by the government. By submitting these forms to banks and other financial institutions, individuals can declare that no TDS needs to be deducted on the interest earned, and thereby avoid unnecessary tax deductions.

Other objectives of Form 15G and Form 15H include:

Simplify tax compliance:

By providing a simple and self-declaration form, the process of tax compliance is made easier for individuals who meet the eligibility criteria.

Save time and money:

By avoiding TDS, individuals can save time and money that would otherwise have been spent on filing for a refund.

Increase disposable income:

By avoiding TDS, individuals can increase their disposable income, which can be used for other purposes such as savings, investments, or consumption.

Encourage savings:

By incentivizing individuals to save their money in financial instruments that earn interest income, Form 15G and Form 15H encourage savings and investment behavior.

Overall, the primary objective of Form 15G and Form 15H is to reduce the tax burden on individuals who earn interest income, and thereby promote savings and investment behavior.

Benefits of FROM 15G and FROM 15H:

Submitting Form 15G and Form 15H can provide several benefits for individuals, some of which are:

Avoid TDS:

The primary benefit of Form 15G and Form 15H is that it allows individuals to avoid TDS on their interest income, provided they meet the eligibility criteria. This can help reduce the tax burden and increase disposable income.

Convenience:

By submitting these forms to banks and other financial institutions, individuals can save time and effort that would have been spent on filing for a refund of the TDS deducted.

Simplifies tax compliance:

Form 15G and Form 15H are self-declaration forms that are simple to fill out, and hence simplify the process of tax compliance.

Encourages savings:

By incentivizing individuals to save their money in financial instruments that earn interest income, Form 15G and Form 15H encourage savings and investment behavior.

Suitable for non-salaried individuals:

Form 15G and Form 15H are particularly beneficial for non-salaried individuals who earn interest income from savings accounts, fixed deposits, or other financial instruments.

Overall, submitting Form 15G and Form 15H can help individuals save taxes, increase disposable income, simplify tax compliance, encourage savings, and benefit non-salaried individuals.