Introduction

• Taxpayers in India widely use Form 15G and Form 15H to prevent the deduction of tax deducted at source (TDS) on their income.
• These forms are used to declare that one's total income is below the taxable threshold and request that the payer not deduct TDS.
• However, many wonder if their efforts to submit these forms are effective or not. Taxpayers also get confused about whether or not TDS will still be deducted despite their submission.
• In this article, we will explore the intricacies of these forms and shed light on whether or not TDS will be deducted.

What are Forms 15G and 15H?

• These are self-declaration forms under the Income-tax Act, 1961.
• These forms are used by those who want to avoid TDS deductions on their income.
• Form 15G is meant for individuals below the age of 60, while Form 15H is for senior citizens, i.e., those over 60 years of age.
• These forms declare that one's total income for the financial year is below the taxable limit and, hence, he or she is not liable to pay any tax.

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What is the Purpose of Forms 15G and 15H?

• The primary purpose is to prevent the deduction of TDS on income when the taxpayer's total income falls below the taxable threshold.
• By submitting these forms, taxpayers can save themselves the hassle of claiming a refund later.
• They also allow taxpayers to receive their income in full without any deduction for TDS.

What are the Conditions for Submitting Forms 15G and 15H?

These forms can be useful tools to avoid TDS deductions. However, for their submission, it's essential to fulfil the following conditions:

a. Eligibility criteria:  Form 15G can be submitted by individuals and Hindu undivided families (HUFs) below the age of 60 years. On the other hand, Form 15H applies to individuals who are over the age of 60.

b. Taxable income limit:  The total estimated income for the financial year should be below the taxable threshold, which is subject to change as per the prevailing tax laws.

c. Valid PAN:  The person submitting the form must have a valid Permanent Account Number (PAN).

d. Nature of income:  These forms apply to interest income from savings accounts, fixed deposits, recurring deposits, etc., but not to salaries or business or professional income.

What are the Submission and Validity Criteria for Forms 15G and 15H?

1. Submission process:  These forms can be submitted to the respective financial institution or payer who deducts TDS, such as banks, post offices, or companies.

2. Validity period:  The declaration made in these forms is valid for the financial year in which they are submitted. Therefore, individuals need to submit a new form each financial year to avail themselves of the benefit of non-deduction of TDS.

What is the Role of TDS?

TDS is a mechanism through which the government collects taxes at the time of income generation. When a person's income exceeds the taxable threshold, the payer deducts a specific percentage of the tax before making the payment. However, by submitting Forms 15G and 15H, individuals can request the payer not to deduct TDS based on their eligibility.

What are the Factors That Lead to TDS Deduction?

Despite submitting Forms 15G and 15H, certain situations may still result in TDS deductions. These are given below:

a. Incorrect information:  Providing incorrect or false information in these forms can lead to TDS deductions and potential legal consequences.

b. Taxable income crossing the threshold:  If the actual taxable income exceeds the limit specified in the form, the TDS will be deducted accordingly.

c. Multiple payers: If one has multiple sources of income and the total taxable income exceeds the threshold, TDS may be deducted by other payers who are not aware of the submissions made using Forms 15G and 15H.

d. Non-filing of Forms 15G and 15H:  Failure to submit these Forms where applicable can result in TDS deductions as per regular tax provisions.

Conclusion:

• To summarise, Form 15G and Form 15H serve as effective tools to avoid TDS deductions on income if the total income falls below the taxable threshold.
• However, it is crucial to provide accurate information, monitor income levels, and submit the forms to all relevant payers.
• By understanding the conditions and potential factors affecting TDS deductions, individuals can maximise the benefits of Forms 15G and 15H and minimise their tax liabilities.
• Consulting a tax professional or a chartered accountant is highly recommended for personalised guidance based on one's financial situation.