All of us are interested in reducing our Income Tax outgo to the minimum by all means. But, if you have investments in bank deposits, the bank will deduct Income Tax at the rate of 10%, if your interest income is above Rs. 10,000 in a year. If you have not updated the PAN details, bank will deduct tax at the rate of 20%. Though your taxable income is less than the exemption limit, the bank will deduct tax from your interest income, if it is above Rs. 10,000. You have to file the IT returns and get refund of the tax deducted in such cases. The other best option will be to submit Form 15G to your bank.
What is the relevance of Form 15G?
By submitting Form 15G, you are informing the bank that your taxable income for that year will be lesser than the exemption limit. For example, if you are filing Form 15G for the Financial Year 2013-14, this means you expect your income for this financial year to be less than the exemption limit of Rs. 2 Lakhs. So, if you submit Form 15G to your bank, bank will not deduct tax from your interest income.
What is the content of Form 15G?
Till the Financial Year 2012-13, the Form 15G was only a simple declaration stating that your income is below the exemption limit and so avoid TDS. But from the Financial Year 2013-14, the Form 15G has been revised.
Revised Form 15G?
The revised Form 15G is asking for your expected income from all sources in the financial year. You should give details of your expected income from Salary, Rent, Capital Gains and Interest.
Who can submit Form 15G and avoid TDS?
Everyone cannot submit Form 15G and avoid TDS. You must satisfy the following two conditions to be eligible to submit Form 15G:
- Your estimated taxable income for the financial year should be less than the tax exemption limit.
- Your estimated interest income from all sources should be less than the tax exemption limit.
Let us explain these by examples.
1. My interest income will be Rs. 2.2 Lakhs for the Financial Year 2013-14, but the taxable income after Section 80C deduction is Rs. 1.2 Lakhs. I don’t have any other income. Can I submit Form 15G and avoid TDS?
No, in this case, you are not eligible to submit Form 15G, because your interest income is more than the exemption limit of Rs. 2 Lakhs for the FY 2013-14.
2. My interest income is Rs. 50,000 and the salary income is Rs. 2.5 Lakhs. I invest Rs. 1 Lakh in Section 80C investments and the taxable income will be Rs. 2 Lakhs. Can I submit Form 15G?
Yes, in this case, your interest income is less than Rs. 2 Lakhs and the taxable income is Rs. 2 Lakhs, which is the exemption limit for the FY 2013-14.
When to submit Form 15G?
You have to submit Form 15G at the beginning of each financial year, if you are eligible to submit the Form for the relevant financial year. If you have deposits in different branches of the same banks, then you have to submit it to all branches to avoid TDS.
In what way is the Form 15H different from Form 15G?
The purpose of both the Forms is the same. Form 15H is to be used by persons aged 60 and above to avoid TDS from their interest income.
Form 15G is not for tax avoidance
Form 15G cannot be used for tax avoidance. This is a facility given to the taxpayer whose tax liability for the year is NIL. So, you have to exercise this option carefully. At the end of the year, if there is a tax liability, you have to discharge the liability to avoid notice from the tax department. But Form 15G is a useful tool for those taxpayers, who are eligible for this. Otherwise, they have to file the IT returns to get refund of the TDS made by the bank.