What is Form 15g

Introduction

Under section 194A of the Income Tax Act, banks deduct TDS when an individual's acquired income via interest exceeds Rs. 40,000 in a year (Rs. 50,000 for senior citizens), calculated by aggregating interest on deposits held in all branches.

However, if your income is below the taxable limit, you can submit Form 15G or 15H to the bank and request a waiver of the TDS deduction. What is Form 15G in PF, and how to fill it out? 
 

What is Form 15G?

Form 15G is a self-declaration form that allows individuals to avoid TDS (Tax Deducted at Source) deductions on their interest income from fixed deposits, savings accounts, or recurring deposits. Individuals under 60 having a total income below the taxable limit for a particular financial year can submit the form to banks and other financial institutions.

To fill out Form 15G, the individual must provide basic information, such as name, address, PAN, and details of their deposits and savings accounts. Individuals must sign the form stating they do not have taxable income for the year.

It is important to note that the form is only valid for one financial year, and must be submitted before the beginning of the financial year. If the individual submits the form after the financial year has started, the bank can deduct TDS for the interest earned before submitting the form.

Overall, Form 15G is a valuable tool for individuals who maximise their interest income by avoiding TDS deductions. Ensuring the form is submitted correctly and within the specified timeframe is crucial.
 

Important features of Form 15G

Now that you’re familiar with Form 15G meaning, here are some key features of this form:

a)    Form 15G can be submitted by individuals below the age of 60 years, Hindu Undivided Families (HUFs) and trusts.
b)    The form must be submitted before the bank pays any interest on your deposit. If you fail to submit it on time, the bank may deduct TDS.
c)    You need to submit the form to all the banks and branches where you have an interest-bearing deposit. If you fail to do so, TDS may be deducted.
d)    You can submit Form 15G only if your taxable income is within the maximum tax-exempt limit in a financial year.
e)    Only resident Indians can avail of this facility. Non-resident Indians (NRIs) and foreign nationals cannot submit Form 15G.
f)    The total interest income you receive in the financial year should be less than the minimum taxable income of Rs 2.5 lakhs. If it exceeds this limit, you will not be eligible to submit Form 15G.
 

Who is eligible to submit Form 15G?

To be eligible to submit Form 15G, individuals and HUFs need to meet certain criteria, which include:

●    Age: Only individuals below 60 years or HUFs can submit Form 15G.
●    Submission: Form 15G should be submitted before the first payment of interest on a fixed deposit or recurring deposit.
●    Submission to all deductors: The individual should submit the form to all the deductors to whom a loan was advanced, i.e., this form will need to be submitted to each bank branch through which the individual is collecting interest.
●    Tax payable: Form 15G can only be submitted by individuals whose tax payable on their total income is zero. This means that the individual's total income should be below the minimum taxable limit specified by the Income Tax Department.
●    Residential status: The individual should be a resident Indian to be eligible to submit Form 15G.
●    Total interest income: The total interest income earned by the individual in the financial year should be less than the minimum exemption amount for that year. The minimum exemption amount for the financial year 2022–23 (AY 2023-24) is Rs. 2,50,000.

It is important to note that if an individual submits Form 15G even when they do not meet the above-mentioned eligibility criteria, it may result in legal action being taken against them. Therefore, it is crucial to understand the eligibility criteria and submit Form 15G only if eligible.
 

How to Fill Form 15G?

To fill out Form 15G, the following details must be provided:

●    Assessee's Name (Declarant): Enter your name as it appears in your income tax records and your PAN number as per your PAN card.
●    Status: Specify if you are an individual or HUF.
●    Previous Year: Provide the financial year for which you are filling out the form.
●    Residential Status: Note that only Indian residents can fill out this form. Confirm your residential status before proceeding.
●    Address Details: Enter your complete address, PIN code, email address, and telephone number.
●    Assessment under the Income Tax Act, 1961: If your income exceeded the taxable limit in the previous six years, answer “Yes” to this question.
●    Latest Assessment Year: If your answer to the above question is “Yes”, mention the latest year in which your income exceeded the taxable limit.
●    Estimated Income for Declaration: Enter the sum of interest or other income on which TDS should not be deducted.
●    Estimated Total Income of the Previous Year: Calculate your total income from all sources, including salary, stipend, interest income, and other earnings. Include the income mentioned in Column 16 above.
●    Details of Form 15G Filed During the Previous Year: Please specify the total number of Form 15G filed for that year.
●    Aggregate Amount of Income for Which Form 15G was Filed: Provide the total income for which Form 15G was filed.
●    Details of Income for Which Declaration is Filed: Enter the identification number of the relevant investment/account, the nature of income, the section under which tax is deductible, and the amount of income, including fixed deposit account numbers, recurring deposit details, NSC details, life insurance policy numbers, etc.
●    Signatures: Mention your capacity when signing on behalf of a HUF or AOP.
 

Benefits of Submitting Form 15G

Form 15G is a self-declaration form that can be submitted to the bank or any other entity deducting tax at source (TDS) on interest income. Here are some benefits of submitting Form 15G:

1.    Avoid TDS deduction: One of the main benefits of submitting Form 15G is that it can help individuals avoid TDS deduction
2.    Saves time and hassle: If TDS is deducted from an individual's income, they must wait until the end of the financial year to claim a refund. This can be time-consuming and may cause unnecessary hassle. By submitting Form 15G, individuals can avoid this inconvenience and receive their income in full.
3.    Helps with cash flow: If TDS is deducted from an individual's income, it reduces the cash they receive. This can cause cash flow problems, particularly for those with a limited income. By submitting Form 15G, individuals can avoid this problem and receive their full income.
4.    Applicable for multiple sources of income: Form 15G can be submitted for multiple sources of income, including fixed deposits, recurring deposits, and savings bank accounts. This means that individuals can submit Form 15G for each source of income where a TDS deduction is not required.
5.    Easy to submit: Form 15G is a simple and easy-to-use form that can be submitted to the relevant income providers. The form can be submitted online or offline, depending on the individual's preference.
 

Differences Between Form 15G and Form 15H

Validity of Form 15G

The form is valid for one financial year, which starts on April 1 and ends on March 31 of the following year.

Suppose an individual or HUF submits Form 15G to a bank or other financial institution at the beginning of a financial year, and their income remains within the tax exemption limit. They will not be subject to TDS deductions on their interest income. However, if their income exceeds the exemption limit during the year, they must pay tax on the income earned, and TDS will be deducted accordingly.

It is important to note that submitting a false Form 15G is a punishable offence and can result in legal action against the individual or HUF. Therefore, it is crucial to ensure that the information provided in the form is accurate and that the individual or HUF meets the eligibility criteria for submitting the form.

In addition, if an individual or HUF submits Form 15G to a bank or financial institution and later realises that their annual income will exceed the exemption limit, they must inform the institution immediately to avoid legal consequences.
 

Common Mistakes to Avoid When Filling Form 15G

Here are some of the most common mistakes to avoid when filling out Form 15G:

1.    Not providing all the necessary information: It is important to ensure that all required information is provided on the form, including the name of the assessee, PAN number, residential status, and estimated income. Incomplete or inaccurate information can lead to the rejection of the form.
2.    Filling out the wrong assessment year: The assessment year should be the year following the financial year for which the form is being filled out. Many taxpayers make the mistake of filling out the current assessment year, which can result in the rejection of the form.
3.    Failing to mention previous years' income: The form requires the assessee to mention whether they have been assessed to tax in any of the previous six years. If the answer is yes, the latest assessment year must be provided.
4.    Failing to declare income from all sources: The form requires the assessee to declare income from all sources, including interest income, salary, and any other income earned during the financial year.
5.    Submitting an outdated form: The format of Form 15G has been revised over the years, and it is important to ensure that the latest version of the form is being used. Using an outdated form can lead to the rejection of the form.
 

Conclusion

Banks deduct TDS if your interest income exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) under section 194A. You can submit Form 15G to avoid a TDS deduction if your income is below the taxable limit. Follow the guide above to fill out the form correctly and save TDS on your interest income.