With the income-tax department making submission of Forms 15G and 15H simple and even allowing online filing, investors of fixed deposits and recurring deposits must file these forms to avoid tax deduction at source (TDS). Ideally, the forms must be submitted to banks 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. Earlier the forms had to be submitted only in paper form, but now one can file electronically.
Any resident individual above 60 years will have to submit Form 15H. Resident individuals below 60 years, Hindu Undivided Family (HUF) 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. Both 15H and 15G are self-declaration forms which have to be submitted by an individual if the total taxable income of a person is going to be less than the permissible limits. So, if an individual is sure that she will not have to pay any tax in a particular year, then he can submit these forms to the banks to avoid TDS from his interest income.
If the forms are submitted electronically, the taxpayer will receive a unique identification number (UIN) from the deductor to all self-declarations in accordance with a procedure by the Central Board of Direct Taxes. Both the UIN and self-declarations details will have to be furnished by the deductor in the quarterly TDS statements.
Banks deduct 10% TDS on the interest paid on fixed deposits. In case the individual does not provide the permanent account number (PAN) number to the bank, 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 PAN.
If you have deposits in various banks or in various branches of the same bank, you still need to submit these forms at every branch. Ideally, one must submit the form before the first payment of the interest and in case of any delay, the bank will deduct the TDS and issue TDS certificate at the end of year.
Investors will have to give details of various investments, code of the income-tax assessment office, complete address, email, phone number, occupation, etc. One must note that while submitting the forms, the individual will also have to mention details of other incomes like dividends from shares and mutual funds, amount of money withdrawn from National Savings Scheme.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 that the information furnished is correct and complete. Any person making a false statement will be liable to prosecution 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 is rigorous imprisonment of six months and can even be extended to seven years, with fine.
The 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 that the bank has deducted TDS for fixed or recurring deposits despite submitting the forms 15G/15H, then he will have to file income-tax returns after the end of the financial year to claim refund.