CBDT Introduces New 15G and 15H Forms with Online Submission Facility
CBDT or Central Board of Direct Taxation has introduced two major changes after a long time. First change is that of compliance reduction which allowed room for modification and simplification of 15G and 15H forms. The second change is what we prefer calling a quantum leap – 15G and 15H have been put online! Tech savvy taxpayers will find this as a welcome change or rather a welcome addition because these forms are still available in the traditional paper format.
How does online 15G and 15H submission work?
Online submission of both 15G and 15H forms work in a pretty streamlined and simple way. Online submission has already been enforced and is functional since October 1, 2015. Here are the steps that happen in order as mentioned:
- Taxpayer submits both forms online after filling up the details accurately.
- The tax deductor is then required to issue UIN or Unique Identification Number to self-declarations of the taxpayers. Remember that 15G and 15H are meant for self-declaration.
- Deductor then provides the self-declarations and Unique Identification Numbers during TDS filing in every quarter.
- The deductor keeps the 15G and 15H declarations of taxpayers for a period of 7 years.
Procedure for online submission of 15G and 15H forms
Those who wish to use the online path will have to have access to online banking with their respective banks. Every bank has provided an online link to 15G and 15H forms. This link is visible only when an individual taxpayer logs in to his or her account using internet banking credentials. Once logged in, the user can then see the link to these forms from the list of services available. Clicking on the link will take him or her to the forms page.
Something important that one should keep in mind
Though the forms 15G and 15H are both meant for avoiding TDS deductions under right conditions, one does not need to fill both the forms. In fact, the two forms are for two different age groups.
Also, just filling out the forms will not help. One needs to understand and assess on his or her own whether he or she is eligible for filling up those forms or not. For instance, if a person’s income is high enough for TDS deductions, he or she should fill the form. Similarly, in case a person’s income in not high enough to attract TDS deduction, there is absolutely no need to filling up the forms.
What is a 15G Form?
This form has been designed in accordance with 1961’s Income Tax Act’s Section 197A’s subsection 1 and subsection 1(A). A firm or a company (in short, a business) is not allowed to fill up this form. Here are the primary features of 15G form:
- A Hindu Undivided Family in order to use this form.
- You must not be a senior citizen. In other words, his or her age cannot be equal to or exceed 60 years.
- If you are filling up form 15G, your previous year’s tax returns must be ZERO.
- If you have different accounts at different branches of a same bank and each account has 100,000 rupees in deposit, you need to submit 15G separately for each branch.
- If you have different accounts at different branches of a same bank and interest earnings from any one branch exceeds 10,000 rupees in any one branch, you have to submit 15G form.
- Though not necessary, you should submit 15G before you receive the first interest payment. This is because, if you don’t the first interest payment will be taxed and TDS certificate will be issued anytime during the year or by the end of the year by the deductor.
- 15G has to be submitted in case where interest exceeds Rs. 5,000 in any given year on financial products such as bonds, advances, debentures, loans or any other product which has not been issued by banks.
What is a 15H form?
This form has been designed in accordance with 1961’s Income Tax Act’s Section 197A’s subsection 1(C). A firm or a company (in short, a business) is not allowed to fill up this form. As far as primary features of 15H goes, everything is same as in 15G except that it is specifically for Senior Citizen, i.e. people have attained the age of 60 or are elder than that age.
Major differences between 15G and 15H
- 15G is for Hindu Undivided Families and individuals who are not Senior Citizens.
- 15H is meant only for Senior Citizen. Hindu Undivided Families are not allowed to use this form.
- One of the major differences between 15G and 15H is that for 15G, a person’s net interest earnings from securities or interests excluding any interest earnings on securities, amounts and units mentioned in 80CCA’s subsection (2) Clause (a), cannot exceed exemption slab as mentioned, which is 250,000. This restriction is completely taken off in case of 15H.
A numerical example
Let us assume at Ankita has a gross monthly income of 3.4 lakhs and her age is 32 years. Of this total income, 2.6 lakhs come from bank deposit interests. She also pays 15,000 rupees in a year as premium for medical insurance and invests 1 lakh in tax-savings investment plans. So,
- 15,000 rupees is not taxable under 80D.
- 100,000 is not taxable under 80C.
Deducting the total of 115,000 rupees from Ankita’s gross yearly income, the remaining income is 225,000 rupees. This amount is below the taxable income slab. Hence, she does not need to pay income tax and becomes eligible for 15G submission.
Ankita earns 260,000 in form of interests on bank deposits. This amount is greater than total exemption limit of 250,000. So, this is where she fails to satisfy the criterion of tax exemption. Hence, Ankita cannot fill 15G.
What if Ankita is not 32 years old but 60 years old? She will have to go for 15H.
Now, if Ankita is 60 years old, all she needs to do is to ensure that her net earnings do not exceed the non-taxable income limit, which is 300,000 per year. No one will be bothering to look at whether her total interest earnings are greater than 250,000 in a year or not.
So in this scenario where Ankita is 60 years old and has total yearly earnings of 360,000 irrespective of the source and she pays rupees 60,000 per year towards her PPF, her net taxable income will be 300,000 rupees. Now since Senior Citizens do not need to pay tax up to 300,000 of yearly income, Ankita will be allowed to submit 15H.
What if 15G and 15H are not filled properly?
There are three scenarios we need to consider:
- The user provides incorrect general information such as age, address etc. Nothing really happens. All the person needs to do is fix such information once notified.
- The person purposefully provides incorrect information about income. This is where, if caught, he or she will be subject to 3 months of imprisonment at least. This imprisonment period may go up to 3 years along with additional fines.
- The person wants to evade tax where net taxes exceed 100,000 in a year. In this case, the person will be punished with minimum 6 months of imprisonment. Imprisonment can go up to 7 years along with additional fines.
Some important questions generally asked:
People ask a set of questions usually because they are misinformed. Here is an exhaustive list of those questions and their proper answers:
(a) Anyone can use 15G or 15H for evading taxes?
Answer: NO! In order to use 15G or 15H, a person needs to have an income which is below or equal to taxable limit and he or she should not have any kind of tax liability.
(b) If 15G or 15H is submitted, do I need to declare this income in my income return?
Answer: YES! Even if you submit 15G and 15H, when you declare income return, you need declare the respective income. This is COMPULSORY.
(c) Once 15G or 15H is submitted, no further taxes are to be paid?
Answer: YES! Once you submit the form(s), you don’t need to pay taxes. In case of 15G however, if there happens to be any tax liability, you have to compulsorily pay the tax (refer to above example of 15G where Ankita has interest earning above the allow tax-exemption limit). Remember that once you pay tax after you submit 15G it will only mean that you gave a wrong declaration and steps can be taken against you.
(d) Is 15G or 15H is submitted to Payers, Financial Institutions and Banks only?
Answer: Yes! You don’t walk up to the income tax department to submit the form. You need to submit it with the organization. The organization in turn sends a copy of the same to Income Tax Commissioner. That means, it eventually goes to Income Tax Department. The IT department can then conduct search on individuals.
(e) Do I need to submit these forms every single year?
Answer: YES! You need to submit these forms every single year right when the financial year starts.
(f) If I have deposits in different branches of the same bank, do I need to I need to submit the form in each branch individually?
Answer: YES! This is mandatory.
(g) In case my income is below taxable income limit and I don’t have tax liability, do I need to provide PAN?
Answer: YES! It is mandatory. Failure to do so will attract 20% tax.
(h) 15G and 15H can help me to avoid TDS deductions for all payment types like rent, professional fees, contract payment etc.?
Answer: NO! It applies only and only for Interest Dividends, Securities and Interests other than Interest on NSS Units, Interest on Securities like Company Deposits and Bank Securities. For other forms of income, 15G and 15H is not applicable.
Well, that’s pretty much everything about 15G and 15H forms. In case you need any other information or you feel we have missed anything, feel free to drop a message.