Form 15H – What is it? How can Form 15H help to save income tax for Senior Citizens? How Form 15H is different from Form 15 G?
A Senior Citizen living mainly on Interest income will be looking for ways to reduce his tax burden. But, if you have savings in bank deposits, the bank will deduct Income Tax at the rate of 10%, if your Interest income is above Rs. 10,000 in a year. Even if your taxable income is less than the basic exemption limit, the bank will deduct tax from your interest income, if it is above Rs. 10,000. You have to file the IT returns and get refund of the tax deducted in such cases. The best option for the Senior Citizen will be to submit Form 15H to his bank and avoid TDS.
Form 15H – Undertaking?
Form 15H is an undertaking that your taxable income for that year is well within the basic exemption limit and there is no tax liability. If you are submitting Form 15H for the Financial Year 2013-14, you expect your income for this financial year will be less than the exemption limit of Rs. 2.5 Lakhs for senior citizens. For very Senior Citizens aged 80 or above, this limit is Rs. 5 Lakhs. If you submit Form 15H to your bank, bank will pay you interest without deducting tax.
What is the content of Form 15H?
Earlier, Form 15H was only a simple declaration stating that your income is below the exemption limit. But from the Financial Year 2013-14, the Form 15H has been revised.
Revised Form 15H?
In the Revised Form 15H, you have to give details of your expected income from all sources i.e. salary, rent, capital gains and interest in the financial year.
Can I submit Form 15H and avoid TDS?
All are not eligible to submit Form 15H and avoid TDS. You must satisfy the following two conditions to be eligible to submit Form 15H:
- Your estimated taxable income for the financial year should be less than the tax exemption limit for that year.
- Your age should be 60 or above.
Let us explain these by an example.
I am aged 62 and my interest income is Rs. 1 Lakh and the rental income is Rs. 2.5 Lakhs. I invest Rs. 1 Lakh in PPF and the taxable income will be Rs. 2.5 Lakhs. Can I submit Form 15H to avoid TDS?
Yes, in this case, your taxable income is Rs. 2.5 Lakhs, which is the exemption limit for the FY 2013-14.
When do I have to submit Form 15H?
You must submit Form 15H at the beginning of the financial year, if you are eligible to submit the Form for the relevant financial year.
In what way Form 15G is different from Form 15H?
The purpose of both the Forms is the same. Form 15G is to be used by persons aged less than 60 to avoid TDS from their interest income.
Form 15H is not for tax avoidance
Form 15H cannot be used for tax avoidance. This is a facility given to the tax payer whose tax liability is Nil. So, you have to exercise this option carefully. At the end of the year, if there is a tax liability, you have to discharge the liability to avoid notice from the tax department. But Form 15H is a useful tool for those tax payers, who are eligible for this. Otherwise, they have to file the IT returns to get refund of the TDS made by the bank.