All resident citizens over the age of 18 with taxable income are required to pay tax on their net income to the Government of India yearly. The income tax slab varies according to the income earned by each individual. For instance, if an individual’s income is between Rs.5 lakh to Rs. 7.5 lakh, they have to pay income tax at a 10% rate.
The government has announced that citizens earning less than Rs.5 lakh in a current financial year are exempted from paying any tax.
Nonetheless, one should also remember that the interest accumulated on investment options such as fixed deposits or recurring deposits is also taxable. According to income tax rules in India, if the aggregate of all interest income is more than Rs.40,000 in a financial year, institutions should deduct tax at source.
Consequently, to avoid paying TDS on interest accrual, one should know how to fill Form 15G and 15H. Submission of these forms means that you are declaring that your net interest income in a financial year is less than Rs.40,000 or Rs.50,000 in case of senior citizens. These forms should be submitted usually at the start of a fiscal year.
What is Form 15G?
It is a self-declaration form under Section 1 and 1A of Section 197A of the Income Tax Act of 1961. An individual under the age of 60 should file it if his/her annual income does not exceed Rs.5 lakh, to avoid paying any tax on earned interests. This is why, one should know how the interest earned on fixed deposit is being taxed.
Form 15G can be submitted by an individual below the age of 6 years or Hindu Undivided Family to all financial institutions where they have a fixed deposit or recurring deposit or a savings account.
What is Form 15H?
Similar to Form 15g, Form 15H is submitted so that no tax is deducted on interests. However, Form 15H should be filed by individuals above the age of 60.
One should also know how to fill Form 15G or 15H to avoid TDS on the following –
- EPF withdrawal.
- Commissions on insurance.
- Income on corporate bonds.
- Post office deposits.
How to fill these forms?
Form 15G and 15H can be filled and submitted online or offline. One can avail the forms from any financial institution, enter the necessary information and submit it with relevant documents.
One can also submit the forms online either by going to the official website of the Income Tax Department or by visiting your financial institution’s website.
The procedure can vary with each organization. However, the necessary steps are given below –
- Login using your password and user ID.
- Go to the tax section on your financial institution’s website.
- Select the form that you want to submit.
- Enter all the required details in the form carefully.
- Recheck and submit the form. Once you complete the submission process, you will be provided with an acknowledgement slip. You can download the acknowledgement slip.
It is important to know how to fill Form 15G and 15H appropriately because declaring wrong information in either of the two forms can lead to severe repercussions such as hefty fine and even imprisonment.
Given below are the details that one needs to enter in a Form 15G or 15H –
- Residential address in detail,
- Telephone number,
- The estimated income amount for which the form is being filed,
- Estimated total income for the previous year,
- Details related to form 15G filed in the last year,
- Income details for which the declaration is being made.
Apart from tax deductions, there are other benefits of Form 15G and 15H for fixed deposits that one should know about.
One can also use an online tool like fixed deposit calculator to calculate the interest they will earn on their investments. It will enable them to know whether they should file Form 15G or 15H or not from beforehand. Taking an informed decision will lead individuals build a substantial corpus for the future with investments like the Bajaj Finance Fixed Deposits.