Use these forms to avoid paying TDS on income from interest, commission, rent, and other sources. Although there is no set deadline for completing these forms, it is ideal to do so as early as possible, preferably in April or May.
When it comes to taxes, the well-established rule is that no income is exempt unless it is less than the taxable level. Your income is tax-free in certain conditions.
However, you must still follow the rules and provide proper documents to avoid paying tax to the income tax (I-T) department when you do not owe any.
TDS is levied on wages, rent, and bank interest.
Individual taxpayers must report their earnings to the government on their own. You will feel the tax burden even as you get money. Entities or individuals making certain payments are required to deduct tax at source (TDS) before distributing the funds. Employers that pay wages are examples, as are banks that credit savings or fixed deposit interest to your account.
Employers are responsible for computing TDS on salaried employees based on the appropriate I-T slab. TDS is normally imposed at a predetermined rate for income other than pay under the I-T Act of 1961.
This rate changes according to the kind and source of income, as well as whether or not a Permanent Account Number (PAN) was issued.
It is vital to remember that the rate does not take into account whether the money produced is taxable or not in the recipient’s hands. In other circumstances, TDS is only applied if the income exceeds a specified level. TDS is to be deducted, for example, when interest income collected surpasses Rs 40,000 and Rs 50,000 in a fiscal year for all resident assessees and resident senior persons, respectively. Similarly, the TDS threshold for corporate bond interest is Rs 5,000.
However, in cases where TDS is being assessed inappropriately or if income is below the taxable limit, a taxpayer may use Form 15 G or 15 H to correct this. Continue reading to learn who must submit Forms 15G and 15H, as well as when and how to file these forms.
Who is eligible to utilize Form 15G/H?
Forms 15 G and 15 H serve the same function, although their applicability varies depending on the taxpayer’s age. Form 15G is for those under the age of 60 who have no taxable income, while Form 15H is for people above the age of 60 who have no taxable income.
Furthermore, “it’s critical to understand that Form 15G and Form 15H are only applicable to residents,’ making them ineligible for use by non-residents,” according to Neeraj Agarwala, Partner, Nangia Andersen India.
What is the purpose of Form 15 G/H?
Forms 15 G and 15 H are for self-declaration. It is intended to avoid excessive TDS deductions on income below the taxable threshold or the basic exemption level. The basic exemption limit under the former system for a resident person under the age of 60 years for the fiscal year 2023-24 is Rs 2.5 lakh, while the exemption limit for resident people aged 60 years or over but under the age of 80 years is Rs 3 lakh.
The exemption limit for residents aged 80 years or older is Rs 5 lakh. The exemption limit for non-resident persons, regardless of age, is Rs 2.5 lakh, while the exemption limit for Hindu Undivided Families (HUF) is Rs 2.5 lakh. For FY 2023-24, the baseline exemption level under the new tax system is Rs 3 lakh for all age groups.
Individuals with interest income, on the other hand, face somewhat different restrictions. “The condition of interest income exceeding the basic exemption limit applies only to Form 15G (those under the age of 60) and not to Form 15H (senior citizens).” Senior people may file Form 15H even if their interest income exceeds the basic tax exemption barrier as long as their taxable income after deductions stays below the exemption ceiling, according to Agarwala.
So, a senior person decides to submit income under the new tax system. In that case, he may file Form 15 H for up to Rs 7 lakh in income for FY 2023-24 since there is no tax up to Rs 7 lakh under the new tax regime (Rs 5 lakh under the old regime) after taking into account the Section 87A rebate.
Where is Form 15G/H relevant or applicable?
Form 15G/H is applicable to a variety of revenue sources, including bank and post office interest, corporate deposits, and others. It may also be utilized to generate rental revenue, dividends, and other benefits. It is important to remember, however, that it does not apply to salary income.
“In general, it appears that Form 15G/15H is only applicable in the case of bank interest earnings.” It is, however, relevant for TDS on earnings such as withdrawal of EPF before five years, interest on bank or post office deposits, TDS on rent, TDS on insurance commission, and so on,” said Vivek Jalan, Partner, Tax Connect Advisory, a multi-disciplinary consulting business.
How should each portion of Form 15G or 15H be completed?
Forms 15 G and 15 H are split into two sections. The income receiver should complete Part 1, while the income payer should complete Part 2. When submitting Form 15 G/H for interest income from a time deposit with the post office, for example, the investor fills out the first section, and post-office authorities fill out the second half.
When you begin filling out the form, you must provide the correct information. Begin by entering your personal information, such as your name, PAN, DOB, residence address, email ID, and contact number. Check that the name and DOB you enter match the information on your PAN.
Additionally, check the box reflecting your residency status. Remember that Form 15G or H is only available to residents. As a result, filling out the form is pointless if you are a non-resident.
You must also identify the prior fiscal year for which the statement is being made. For example, if you’re making a declaration for the current fiscal year, choose 2023-24.
Clearly clarify the specifics of the income for which you are declaring. For example, indicate if the money is from a post office deposit or rental income.
You must also include your total revenue from all sources earned or expected to be earned throughout the fiscal year. In addition, independently state the amount of income for which you request TDS exemption using this form. For instance, if your total yearly income from all sources is Rs 2.4 lakh and you have an expected income of Rs 5,000 from a post office FD, enter Rs 2.45 lakh as the ‘expected Total Income, including the estimated income gained on deposit(s).’ When sending Form 15 to the post office, write Rs 5,000 individually in the area given.
Separate forms are required for each account/purpose.
Remember that you must submit a separate Form 15 with each company and account. So, if you have revenue from three banks and one post office, as well as rent from one housing unit, but the entire income is not taxable, you must file five Form 15s: three for the banks, one for the post office, and one for the renter.
Remember to include account information, unique identification numbers for applicable investments, bank account information, deposit IDs, NSC data, life insurance policy numbers, and so on.
Sign in the section given for ‘Signature of the Declarant’ after completing the form. Your signature certifies that the information supplied is accurate and genuine.
Although there has yet to be a set date for filing Form 15 G/H, it is best to do it early in the fiscal year, usually in April or May. This helps to avoid unwarranted TDS deductions. To ensure submissions, always study the most recent instructions and, if necessary, engage a tax professional.
Credit:- Money Control