What is Form No 15G?
January 11 , 2013

If you fall below the tax bracket (i.e. your annual income is below the taxable limit set for the year), you obviously want to avoid a situation where you pay tax first and then try to recover it from the tax department later. One such case is Tax Deducted at Source (TDS) - fixed deposits and post office schemes in general deduct TDS on interest and pay it to the Government.

TDS on deposits

Presently TDS is deducted at the rate of 10% if interest on all your deposits in a branch is greater than Rs 10,000. TDS is applied every time the bank/post office pays you interest and also at the end of the financial year on interest accrued but not yet paid.

Way out of TDS- form 15G

Form 15G allows you to declare to the Bank or Post Office that you fall below the tax bracket. You can use this for yourself or for your Hindu Undivided Family (if you have one). When they receive this declaration, they do not deduct TDS on interest thereafter. Of course, a wrong declaration by a person who falls in the tax bracket is a punishable offence!

Form 15G is available for download on our portal. You can download and submit it at the bank. Instead you can pick it up from the bank, fill it up and submit it.

Non-resident Indians cannot submit Form 15G to skip TDS.

Who should furnish form 15G?

In order to be eligible to claim interest with tax being deducted by the bank or post office you need to satisfy two conditions:

1. Your final taxable income should be zero in the previous year. Final taxable income is what you are left with after deducting for investments and expenses allowed. Presently income above Rs 2 lakhs attracts tax so your final income should be less than Rs 2 lakhs.

2. Your income from these deposits should not exceed the income limit for which there is no tax. This implies your income from interest on such deposits should not exceed Rs 2 lakhs. It is possible that your net income is less than the taxable income but the gross income from deposits is more than the taxable income.

If you satisfy both these conditions and you hold a PAN card you can submit form 15G to your bank/post office. If you do not hold a PAN card higher TDS of 20% (or 30% in case of NRO deposits) will be applicable even if you furnish form 15G. If you are 60 years or older and satisfy these conditions you need to submit form 15H.

Here is an illustration: Ravi is 41 years old and his gross annual income in 2012-13 was Rs 3 lakhs. Of this Rs 50,000 was from interest on his bank deposits and post office SCSS. He invested Rs 1 lakh in section 80C products and also pays Rs 10,000 as medical insurance premium for his family. Is he eligible to claim non-deduction of tax at source for his deposits?

He is. Firstly his final taxable income works out to Rs 1.9 lakhs (Rs 3 lakhs- Rs 1.1 lakhs) which makes his income tax liability zero. Secondly his income from interest on deposits on which the declaration is being made is less than Rs 2 lakhs.

Instead suppose from Ravi's gross income of Rs 3 lakhs he gets Rs 2.2 lakhs as interest from deposits. Even if his net income after deductions is below taxable income he is not eligible to get TDS exemption through Form 15G.

Also note that income from FD on a minor's name is considered as income of the parent/guardian who earns more and is taxed according to his/her tax slab.

When to furnish form 15G?

Since TDS applies every financial year as many times as you are paid interest, you must submit form 15G at the start of every financial year before interest is paid. And note that for each deposit you hold in a branch separate form 15G must be submitted if the aggregate interest on them is expected to be over Rs 10,000.

If you fail to submit form 15G on time and TDS has been deducted you won't be refunded by the bank even if you submit it later on. You would have to claim it while filing tax returns.

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