Basic points
No TDS to be deducted by bank in case of –
i) Interest on saving bank account.
ii) Recurring deposits.
Bank deducts TDS on interest payment of fixed deposit u/s 194 A.
(As per sec 194 A for payment of interest other than on securities, bank deducts 10% TDS, if payment exceed Rs. 10000 p.a.)
Form no. 15G and 15H are to be submitted every year with bank. These forms are valid only for the financial year in which you have furnished these forms. If you want to apply for nil TDS in the new financial year, then you will have to resubmit these forms. Form 15H or 15G are meant to prevent TDS and not to avoid tax or file your tax return. You may be required to file your tax return if your total income before the deductions is above the basic tax exemption limit.
Form 15G/15H is a self declaration form, which is provided by a person resident in India (not being a company or firm) to their deductor that the tax on his estimated total income for the previous year will be NIL.
Assessee should submit these forms before the end of financial year or before first payment of interest whichever is earlier.
All banks and financial institutions will deduct TDS if payment of interest on fixed deposits exceeds Rs. 10000 during the financial year.
Bank will issue TDS certificate also called form 16A which mentions the details of TDS payments with the government.
The limit of Rs. 10000 is applicable for each branch of a bank. So each branch of the bank will see whether the interest of the whole year on all the FDs exceeds the threshold of 10000.
If a person is making FD in different branches of same bank then these forms should be deposited at each and every branch where the deposit has been made. For example, if Mr. Ashish has made deposits at three different branches of SBI, then he has to submit the Forms at each branch separately.
In case of FDs made for longer duration where interest on the FD to be paid on maturity, bank will deduct TDS on interest accrued for the year.
Please ensure to mention Permanent Account Number (PAN) on the forms while submitting form No. 15G or 15H. In case, taxpayer fails to provide PAN to the deductor, the tax would be deductible @ 20%.
These Forms are to be submitted in duplicate, one of which is forwarded to the IT department.
These Forms can only be used for payments like dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units. For other types of payments (like brokerage, rent etc), these forms cannot be used.
A bank can track you using unique customer ID. If the combined interest in all the branches of bank exceeds the threshold limit of Rs. 10000, TDS will be deducted if you have not filed form 15G/15H. Therefore, it is best to provide the form then to risk TDS. They can then reclaim the amount by filing their tax returns. The second option is to split fixed deposit across several banks and branches so that TDS exemption limit is not breached.
Difference between 15G and 15H-
| Form 15G | Form 15H |
|---|---|
| Submitted by individual below the age of 60 years. | Submitted by senior citizens(60 or above 60 year) |
| Can be submitted by HUF also. | By individuals only (senior citizens). |
| Two conditions: | One condition: |
| § The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil; and | § The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil; and |
| § The aggregate amount of interest income etc. received during the financial year from all sources should not exceed the basic exemption limit for that relevant year. | Can be submitted by the senior citizen even though the total interest amount from the payer may exceed Rs. 3.0 Lacs (i.e., the limit of basic exemption limit). |
| · Can be submitted by residents only. | · Can be submitted by residents only. |