The interests that individuals and corporations earn on investments like FD and company deposits are liable for taxation. This tax is deducted at source (TDS), which means that your financial company will deduct the tax amount and give you the rest as interest. The lowest threshold of taxable interest amount is Rs. 10,000. If you earn interest over that amount, TDS will apply according to the existing rates.
However, TDS is also adjustable when an individual pays his/her annual taxes. One can also get it refunded when filing for an Income Tax Return (ITR). Since the process is often tedious and time-consuming, you can avoid this hassle by filling out a form 15g and 15h form.
What are 15G and 15H Forms?
As mentioned above, any interest income above Rs. 10,000 is TDS deductible. Under normal circumstances, the TDS rate is 10%. Individuals who do not provide their PAN details have to cough up 20% of their income as TDS. Forms 15H and 15G are the best ways to avoid these taxes.
15G and 15H forms are declarations that you would submit to the financial institutions and they should not deduct TDS on your interest income. Form 15H is applicable for senior citizens while Form 15G is for those below 60 years of age, and also trusts and HUFs. However, it is only for citizens residing in India; NRIs cannot avail the benefits of these forms.
It is advisable to fill up Forms 15H and 15G at the beginning of a financial year to avail the full benefits of Form 15G and 15H. Both these forms are annual, which means that you have to submit these every year to get their benefits.
Make sure all the information that you provide on these forms should be accurate. Wrong or false data will attract heavy penalties under Section 227 (IT Act), including imprisonment and fines.
Now, Check Out The Eligibility Criteria
Everyone is not eligible for the benefits of form 15G 15H. You must meet a few basic eligibility criteria to take advantage of these forms.
Form 15G Eligibility Criteria
Here are the requirements you must fulfil to enjoy the benefits of form 15G.
- You have to be an individual, trust or HUF. Companies and firms are not eligible for this exemption.
- You must be a resident citizen of India.
- Your age in the year of calculation should be below 60 years.
- The tax which is calculated on your total income should be nil.
- The interest accumulated throughout that financial year should be less than Rs. 2, 50,000.
Form 15H Eligibility Criteria
The eligibility criteria for Form 15H are similar to that of Form 15G with a few minor differences. To avail the benefits of this form, you have to fulfil the following:
- You must be a citizen of India and reside within its territory.
- You must be 60 years or older. Individuals who are about to turn 60 in that financial year are also eligible.
- It is accessible only to individuals.
- Your total income on interest should be less than the exemption limit of that particular year. For the fiscal year 2018-19, this amount is Rs. 3,00,000 for senior citizens and Rs. 5,00,000 for super senior citizens (above 80).
- The tax accumulated on your total income is nil.
If you meet these minimum eligibility criteria and submit the forms, you can save quite a few thousand rupees every year. However, in emergencies and other financial crunches, that might not be enough. You may take a personal loan to meet those requirements. NBFCs like Bajaj Finserv offer these unsecured loans at the most flexible terms with easy instalment options.
The popular NBFC also brings you pre-approved offers not only on personal loans but also on home loans, business loans, and various other financial products. Such offers simplify the procedure of availing advances and also help save your time in the process.
Nevertheless, financial crunch or not forms 15G and 15H are great ways to get an income tax exemptions from TDS on interest income. You should keep yourself updated with the eligibility criteria of these forms to enjoy their full benefits.