As per section 194A (3) (I) (a) of the Income Tax Act, 1961, where the amount of interest or aggregate of the amount of interest credited or paid or likely to be credited or paid during the financial year exceeds Rs.10, 000/-, interest on deposits other than banks, exceeds limit of Rs. 5000/- per branch tax has to be deducted at source from the first interest flow itself.
Until fewmonths back, old format of Form 15G/H was used to file but recently IT Dept. has issued new format of Form15G/H which has to be filed for the Assessment year 2014-2015. As per note 4 of revised format of Form 15H, Banks and other institutions cannot accept declaration in Form 15H where aggregate amount of interest paid or credited or likely to be paid or credited during the financial year surpasses the ceiling which is exempt from tax and deduction(s) as per Chapter VIA, if any, for which the Assessee is eligible. There is a similar restriction in note 6 of the revised Form 15G.
The maximum amount which is not chargeable to income tax, relevant for declaration in Form 15G/15H, is as mentioned below:-
- Individuals up to age of 60 - Rs.2, 00,000/-
- HUFs, Trusts & Associations - Rs2, 00,000/-
- Individual customers with age 60 years and above but less than 80 years. (DOB shall be either on or before 31/03/1954 but after 31/03/1934) - Rs.2, 50,000/-
- Individual customers with age 80 years and above. (DOB shall be either on or before 31/03/1934) - Rs.5, 00,000/-
These forms are used for non deduction of Tax at source by the party giving interest on such deposits. But few people know the implications of filing Form 15G/H and other important facts related to this Forms.
What is Form 15G/H
Form 15G/H is a type of declaration to be filed by an individual or a person (not being a company or the firm) in order to receive certain payments (dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units) without deduction of tax at source (TDS).
Difference between Form 15G and 15H
Both the Forms are same. The difference is only that Form 15G has to be filed by persons below 60 years of age and Form 15H has to be filed by persons above 60 years of age.
Here, the word person refers to individual or person (not being a company or firm). So, HUF and Association of Persons can also use this form.
Certain points require strict attention regarding Form 15G/H:-
1) PAN is mandatory for making declaration using Form 15G/H from 01/04/2010.
2) Irrespective of the fact that Form15G/H has been filed or not, such income has to be mentioned under proper head while filing the return.
3) These Forms are deposited in two copies, one of which is forwarded to the IT department. So, the Income Tax Authorities can make further inquiries regarding the same income.
4) It should be deposited at the beginning of each Financial year.
5) These Forms should be deposited at each and every branch where the deposit has been made. For example, if you have made deposits at three different branches of Axis Bank, then you have to submit the Forms at each branch separately.
6) These Forms can only be used for payments like dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units. For other types of payments, these forms cannot be used.
7) These Forms are not applicable for NRIs.
8) If anyone has opted for monthly interest, he should deposit the Form at the start of financial year compulsorily as the TDS could be done from the starting month itself if he fails to submit the same.
So, understanding the use of Form 15G and H, one can make sure that the tax for which he is not liable, does not get deducted at source.