As per the provisions of income tax act (Section 194A), if you are receiving interest amount of Rs. 10000 during the financial year then bank has to deduct income tax at the rate of 10% on such interest and deposit it against your PAN number to the income tax department.
In case you do not have a PAN or you have not submitted PAN to your bank then TDS has to be deducted at the rate of 20% instead of deducting @ 10%.
Please remember, if interest amount is in excess of Rs. 10000 then TDS has to be deducted on the whole interest amount not on the excess portion of Rs. 10000.
For example if interest received during the financial year is Rs. 10001 then TDS will be deducted on Rs. 10001 (not on Rs. 1).
Form 15G or 15H are two self-declaration forms that can be submitted to your bank if you are not taxable during the financial year. With submission of such form 15G or 15H, bank will not be deducting TDS from your interest income amount assuming that you are not taxable during the financial year.
You are not required to submit both the forms. Based on your age either of the form 15G or 15H has to be submitted to the concerned bank where you have deposits.
Form 15G is to be submitted by individuals who are below 60 years of age and form 15H is to be used by individuals above 60 years of age.
Form 15G can also be used by HUFs, Society, trust etc whose incomes are not taxable in India.
Form 15G and Form 15H are applicable for one financial year. After completing one financial year you need to resubmit such form once again to the bank for not deducting TDS on interest.
While submitting form 15G and 15H you need to declare your expected income and have to declare that such income will be below the taxable limit. Before giving form 15G and 15H you should make sure that your incomes are below basic exemption limit.
For the financial year 2012-2013 and 2013-2014, the basic exemption limit for individuals below the age of 60 years is Rs. 200000, for individuals within the age limit of 60 to 80 years the limit is Rs. 250000 and those above 80 years of age have a basic exemption limit of Rs. 500000.
For financial year 2014-2015, basic exemption limit has been changed. Please read our article income tax rate for financial year 2014-2015 or assessment year 2015-2016 for more information.
Any one falling under this category will not be taxable. Incomes above this basic exemption limit are taxable. If you are expecting your income during the financial year to be more than this limit then form 15G or 15H is not for you.
Form 15G and form 15H has to be submitted at each branch where you have deposits i.e. if you have 5 deposits in different branches then you need to submit 5 form 15G or form 15H for such deposits.
There can be instances where after submitting form 15G or 15H, the bank has deducted TDS out of your income. In such cases the bank has either misplaced the form or has lost the track of it. In this case where customer has ended up paying tax, the customer has to go through the process of refund.
To build a system of accountability RBI has instructed all banks to issue an acknowledgement in receipt of form 15G or form 15H by which such banks can not deny of receiving such forms.
In case you have not provided form 15G or 15H and bank has deducted TDS on your interest amount then such income tax as deducted has to be claimed as refund from IT department while filling your income tax return.
To know the exact amount that has been deducted by bank, you can either refer form 16A that has been issued by the bank or 26AS available online in you income tax efilling website.
As you do not know how long this refund process will take we suggest you to submit form 15G or form 15H and avoid deducting TDS from your source of income. To know how to avoid TDS on your deposits read this article.
Download new from 15G
Download new Form 15H