Understanding Form 15G: Avoiding TDS on Interest Income

Understanding Form 15G: Avoiding TDS on Interest Income

Form 15G is a helpful tool for taxpayers in India to avoid Tax Deducted at Source (TDS) on their interest income.

What is Form 15G?

Form 15G is a declaration form submitted by individuals under 60 years of age and Hindu Undivided Families (HUFs) to banks or financial institutions. By submitting it, you declare that your total taxable income falls below the tax-exempt limit for the financial year, enabling you to receive your interest income without any TDS deduction.

Who Can Use Form 15G?

As mentioned earlier, Form 15G is for specific categories of taxpayers:

• Individuals below 60 years of age: This includes anyone under the age of 60 in a given financial year.
• Hindu Undivided Families (HUFs): A HUF is a legal entity formed by an undivided family, including parents, unmarried children, and widowed daughters.

When is TDS Deducted on Interest Income?

Banks and other financial institutions are required by law to deduct TDS on interest income exceeding a certain limit. This limit is currently Rs. 40,000 per financial year for individuals below 60 and Rs. 50,000 for senior citizens (who use Form 15H).

Benefits of Using Form 15G

There are two main benefits to using Form 15G:

• Avoids TDS deduction: By submitting a valid Form 15G, you can receive your interest income in full, without any TDS deduction at source.
• Reduces paperwork: If your total taxable income falls under the tax-exempt limit, filing Form 15G eliminates the need to file a separate income tax return just to claim a refund on TDS deducted on your interest income.

How to Fill Out Form 15G

Form 15G is a two-part document. Here's a section-wise breakdown:

Part 1: To be filled by the declarant (you)

1. Name of the Assessee (Declarant): Enter your full name as per your PAN card.
2. PAN of the Assessee: Provide your valid PAN card number. A valid PAN is mandatory for filing Form 15G.
3. Status: Select your income tax status, which could be Individual, Hindu Undivided Family (HUF), or Association of Persons (AOP), whichever applies to you.
4. Previous Year: Indicate the previous financial year for which you are claiming no TDS deduction.
5. Residential Status: Mention your residential status as a resident individual. Form 15G cannot be submitted by Non-Resident Indians (NRIs).
6. Assessed to Tax: Tick "Yes" if you were assessed for tax under the Income Tax Act in any of the previous assessment years. If yes, mention the latest assessment year.
7. Estimated Income for Declaration: Specify the estimated income for which you are submitting the declaration (interest income in this case).
8. Estimated Total Income: Enter your total estimated income for the financial year, which includes all your income sources.
9. Details of Previous Form 15G (if any): If you have already submitted Form 15G for the same financial year, mention the details of the previous declaration along with the total income declared.
10. Details of Income for Declaration: Provide your investment account details (fixed deposit account number, etc.) for which you are filing the declaration.

Part 2: To be filled by the deductor (recipient of the income)

This section is not for you to fill out. It's reserved for the bank or financial institution that will be receiving and processing your Form 15G.

Important Points to Remember

• Carefully review the form for any errors or omissions.
• Form 15G is valid only for the specific financial year mentioned in the form.
• Providing false information in Form 15G to avoid TDS is a punishable offense under the Income Tax Act.