Form 15G is one of the most crucial forms when it comes to TDS and can help you save your taxes that might get deducted if not given attention at the right time! Scroll through the article to learn more about the form and how this form can help you save your money and fill in the right amount of tax.
What is it?
In India, Form 15G is a self-declaration made under Section 197A of the Income Tax Act, of 1961. Individuals under the age of 60 and Hindu Undivided Families use it to claim that their total income is below the tax threshold and that no tax should be withheld at source (TDS) on specific forms of income.
Interest income from fixed deposits (FDs), recurring deposits (RDs), and some other deposits with banks and financial institutions are principally covered by Form 15G. The institution paying the interest will typically deduct TDS if the interest income exceeds a certain threshold. The person can submit Form 15G to the institution and ask them to stop deducting TDS from the interest if their total income is below the taxable limit.
Example of Form 15G
Let's imagine that you are a student who has deposited money in a fixed-rate loan with a bank. TDS is applied to the interest that is earned on the fixed deposit. However, because you are a student, your total income is below the taxable threshold, thus you are exempt from paying income tax.
In this situation, you might give the bank where your fixed deposit is held Form 15G. You certify that you satisfy the requirements and are qualified for TDS exemption on the interest income from the fixed deposit by submitting Form 15G. When satisfied, the bank will take your declaration into account and stop deducting TDS on the interest payment it has given to you.
The benefit of Form 15G is that it can assist taxpayers, particularly those with lower incomes, in avoiding the deduction of tax at source when they are not required to pay any tax or when their tax due is below the established threshold. Here are some crucial details emphasizing the significance of Form 15G:
- Preventing needless TDS: Using Form 15G, people can stop the tax from being withheld at source on certain types of income, including interest from fixed deposits, recurring deposits, and other types of savings. This is especially beneficial for those with lower incomes who might not have a substantial tax liability.
- Ease of compliance: People can avoid the burden of requesting reimbursements for excessive TDS deducted by submitting Form 15G. It makes compliance easier by avoiding irrational tax deductions upfront.
- Liquidity preservation: Taxpayers can make sure that TDS deductions do not interfere with their cash flows by using Form 15G. It is especially beneficial for people whose daily expenses or financial obligations are financed mostly by interest income.
- Small taxpayers and senior persons: Form 15G is especially helpful for small taxpayers and senior citizens who have few other sources of income. They can receive financial relief by submitting the form and receiving an exemption from TDS on their interest income.
- Reduction in administrative burden: By exempting banks and financial institutions from deducting TDS on eligible persons, Form 15G lessens their administrative burden. This simplifies their procedures and lessens the amount of documentation needed to comply with TDS.
It's crucial to remember that only those who satisfy the Income Tax Department's eligibility requirements should file Form 15G. If it turns out that the data you entered on the form is fraudulent or inaccurate, you could face fines and other legal repercussions.
Difference between 15G/15H
The Income Tax Act of India provides self-declaration forms such as Form 15G and Form 15H. Individuals use these forms to declare that certain types of income should not be subject to tax deduction at source (TDS) because their income is below the threshold that qualifies as taxable income. Although both forms have a similar objective, they are appropriate for various groups of people depending on their age and wealth. Here is how Form 15G and Form 15H differ from one another:
Form 15G: This form is for anyone under the age of 60 who meets specific income requirements (including Hindu Undivided Families, or HUFs).
Form 15H: This form is for elderly citizens, or people who are 60 years of age or older.
Form 15G: It is intended for people under the age of 60.
Form 15H: It is designed exclusively for seniors who are 60 years of age or older.
Form 15G: The individual's total income for the fiscal year must be less than the taxable limit to be eligible to file Form 15G.
Form 15H: The senior citizen's total income for the fiscal year must be less than the taxable limit to submit Form 15H.
Types of Deductible Income
Form 15G: Use Form 15G to indicate that no TDS should be taken from income derived from interest on securities, interest from sources other than securities (such as bank deposits), etc.
Form 15H: This document is used to state that no TDS should be withheld from any kind of income, including interest on securities, bank deposits, rent, etc.
Form 15G: Form 15G cannot be submitted if an individual's total income is greater than the maximum amount exempt from taxation. The maximum amount is presently Rs 2.5 lakhs for individuals under the age of 60.
Form 15H: There is no set maximum income level for submitting Form 15H.
Needs for Submissions
Form 15G: To receive income without TDS deduction, Form 15G must be completed annually for each fiscal year by the payer of the income (such as a bank or post office).
Form 15H: It must be delivered annually to the payer of the income for each fiscal year.
How do I access and download the form?
To obtain and download Form 15G, just complete the following:
- Visit the Income Tax Department of India's official website at https://www.incometaxindia.gov.in.
- Select the "Forms" tab from the homepage or look for a section devoted solely to forms.
- You can find a list of different income tax forms under the Forms section. Look for Form 15G or "Declaration under Section 197A(1) and Section 197A(1A) of the Income-tax Act, 1961 to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax."
- Locate Form 15G and click on it to download or open it.
- Usually, the form will be provided in PDF format. For later use, you can save it to your computer or another device.
Note: To comply with any revisions or changes to Form 15G, make sure you get the most recent version from the official Income Tax Department website. To ascertain your eligibility and comprehend the particular requirements for submitting Form 15G, it is advised that you speak with a tax expert or check the Income Tax Department's recommendations.
How do I fill out the form online?
The general procedures for filling out Form 15G online are as follows:
- Visit https://www.incometaxindiaefiling.gov.in/ to access the Income Tax Department's official website for e-filing.
- Create an account by clicking the "Register Yourself" link on the website if you haven't already, then complete the registration steps. Login to access your account if you already have one.
- Find the "e-File" tab after logging in, then choose "Income Tax Forms" from the drop-down menu.
- Make your selections for "Form 15G" and the relevant evaluation year from the list of available forms.
- Complete Form 15G with the necessary information. Personal information, PANs (Permanent Account Numbers), salary information, and, if applicable, details of prior declarations are normally included in these details. Make sure the information provided is accurate.
- Check the completed form for any mistakes or omissions. Ensure that you have included all the relevant details.
- Verify the information, then electronically submit the form. The website could ask you to submit the form along with any necessary supporting documentation. If you need to attach documents, follow the instructions on the website.
- You will receive an acknowledgment or confirmation that your Form 15G has been filed once you have successfully submitted the form.
When and Where to submit Form 15G?
You should go to the financial institution where you have your income-generating accounts, such as banks, post offices, or other financial intermediaries if you need to file Form 15G. Form 15G becomes applicable and eligible in these particular scenarios:
- Employee Provident Fund (EPF) Withdrawal: In India, EPF is a retirement benefit program. TDS is imposed if an individual withdraws more than Rs. 50,000 from their EPF account before accumulating five years of continuous service. The individual can, however, file Form 15G with the EPF authorities to request an exemption from TDS if their total income is below the taxable threshold.
- Corporate Bonds: To raise money, corporations issue corporate bonds as debt securities. Taxes are calculated based on the interest earned from business bonds. TDS is applicable if the interest income from corporate bonds exceeds Rs. 40,000 in a fiscal year. To avoid TDS, the person might file Form 15G with the bond issuer if their total income falls below the taxable threshold.
- LIC: Policies issued by the Life Insurance Corporation, or LIC, may produce income in the form of interest or maturity funds. TDS is applicable if the proceeds from a maturity or interest income exceed Rs. 40,000 in a fiscal year. Individuals can submit Form 15G to LIC to avoid TDS deductions if their combined income is less than the taxable threshold.
- Rental Income: Rental income is not taxable under Form 15G. Section 194-I of the Income Tax Act permits the general deduction of TDS on rental income. A person can file an income tax return and request a refund of the TDS deducted if their rental income falls below the taxable threshold.
- Post Office: Post office savings plans that pay interest include fixed deposits and recurring deposits. TDS is applicable if the interest income from post office savings exceeds Rs. 40,000 in a fiscal year. Individuals can submit Form 15G to the post office to avoid a TDS deduction if their combined income is less than the taxable threshold.
Form 15G is often available through the relevant financial institution or as a download from their official website. Complete the form with the essential information, such as your PAN (Permanent Account Number) and information about your income, and deliver it to the responsible person at the financial institution. They typically have a designated desk or department for receiving such forms.
What to do if forgotten?
If TDS has already been taken out and Form 15G hasn't been submitted, you might need to request a refund when you file your income tax return. Mentioning the TDS deducted and including other pertinent information in the relevant part of your income tax return form will allow you to claim the refund. For the precise methods and procedures to claim a refund in such circumstances, it is advisable to seek advice from experts or check the guidelines provided by the Income Tax Department of India.