Banks have asked customers who have invested in fixed deposits and recurring deposits to file forms 15H and 15G to avoid tax deduction at source (TDS) at the beginning of the financial year. Banks will deduct TDS if the interest from fixed or recurring deposits exceeds Rs 10,000 in a financial year. However, one must keep in mind that a false declaration in Form 15G or 15H will attract penalty under Section 277 of the Income Tax Act.
An individual, 60 years or above, would need to submit Form 15H. Resident individuals below 60 years, HUFs and trusts will have to file Form 15G. Non-resident individuals or companies cannot file these forms. This limit is applicable for each branch of a bank and not for all the branches of a bank taken together.
If you have deposits in various banks or in various branches of the same bank, you must submit these forms at every branch. Ideally, one must submit the form before the first payment of interest. In case of a delay, the bank will deduct the TDS and issue TDS certificate at the end of year.
Both 15H and 15G are self-declaration forms that have to be submitted by an individual if the total taxable income of a person will be less than the permissible limits. So, if an individual is sure he does not need to pay any tax, he can submit these forms to the banks to avoid TDS from his interest income.
Banks deduct 10% TDS on the interest paid on fixed deposits. In case, the individual does not provide the PAN, the bank will deduct TDS on interest from fixed deposit at 20%. While submitting the forms, the individual investor must ensure that he gives correct Permanent Account Number (PAN).
Investors are needed to give details of various investments, code of the income tax assessment office, complete address, email, phone number, occupation. One must note that while submitting the forms, the individual has to mention details of other incomes like dividends from shares and mutual funds, amount of money withdrawn from National Savings Scheme.
While the declaration has to be submitted in duplicate, some banks will take three copies, as one copy is given to the investor as acknowledgment from the bank. Before signing the verification, the declarant must ensure the information furnished is correct and complete. Any person making a false statement will be liable to prosecuted under Section 277 of the Income Tax Act, 1961. On conviction, in case where the tax sought to be evaded is more than Rs 25 lakh, the punishment of rigorous imprisonment of six months and can even be extended to seven years with fine.
Bank, however, will not deduct any TDS on interest on deposits in a savings account if the interest paid is below Rs 10,000 in a year. In case the investor finds the bank has deducted TDS for fixed or recurring deposits despite submitting the forms 15G/15H, he will have to file income tax returns after the end of the financial year to claim refund.