Fixed deposit (FD) investors and senior citizens can avoid unnecessary Tax Deducted at Source (TDS) on their interest income by submitting the correct self-declaration forms to their banks. Understanding whether to file Form 15H or Form 15G can significantly improve cash flow and eliminate the need to claim tax refunds through Income Tax Returns (ITRs) later.
Understanding TDS on Interest Income
Under current income tax regulations, banks are mandated to deduct TDS once interest income crosses a specific threshold. However, if an individual's total tax liability for the financial year is zero, they can submit a self-declaration to request that no tax be deducted from their interest earnings. This is particularly beneficial for retirees who often rely on interest from FDs and other savings instruments as a primary source of income.
Form 15H: For Senior Citizens
Form 15H is specifically designed for resident individuals aged 60 years or above. Eligible senior citizens can use this form to receive interest income without TDS deduction, provided their estimated tax liability for the entire financial year is zero. Filing Form 15H at the beginning of each financial year helps maintain consistent cash flow, preventing temporary reductions due to TDS.
Form 15G: For Other Eligible Taxpayers
For taxpayers below the age of 60, Form 15G serves a similar purpose. This form can be submitted by resident individuals and Hindu Undivided Families (HUFs) whose estimated tax liability for the financial year is nil, and whose total income (after all eligible deductions and exemptions) remains below the taxable limit. The key distinction between the two forms is age: 15H is exclusively for senior citizens, while 15G is for younger eligible taxpayers.
Where and When to Submit These Forms
Taxpayers can submit Form 15G or Form 15H to various deductors, including banks (for fixed and recurring deposits), post offices, insurance companies, the Employees' Provident Fund Organisation (EPFO), companies paying dividends, and mutual fund houses. These forms are typically available via internet banking portals, the Income Tax Department's e-filing website, or the EPFO portal. It is crucial to remember that these declarations are not permanent and must be submitted at the start of every new financial year. If you have deposits across multiple financial institutions, separate forms may be required for each.
Important Considerations Before Filing
- Accurate Income Estimation: Carefully estimate your total annual income to ensure you genuinely have no tax liability for the financial year.
- PAN Details: Always quote your correct Permanent Account Number (PAN) when submitting the declaration.
- Penalties: Providing incorrect information or making a false declaration can lead to penalties under the Income Tax Act.
What if TDS Has Already Been Deducted?
If you missed the deadline and TDS has already been deducted, you can still recover the amount. The deducted tax will be reflected in your Form 26AS and the Annual Information Statement (AIS). By reporting your interest income and claiming TDS credit when filing your Income Tax Return (ITR), any excess tax deducted will be refunded by the Income Tax Department, subject to eligibility.
Looking Ahead: Form 121 from FY 2026-27
The government has announced that Form 15G and Form 15H will be replaced by a unified Form 121 under the Income Tax Act, 2025. This change will take effect from Financial Year 2026-27. Until then, eligible taxpayers should continue to use Form 15G or Form 15H based on their age and eligibility. From FY27 onwards, Form 121 will serve as the single self-declaration form for taxpayers seeking TDS exemption on eligible income where no tax is payable.