Personal Finance

Avoiding TDS with 15G and 15H

Anand Kalyanaraman | Updated on May 05, 2018 Published on May 05, 2018

Submit one of these to the bank and get your income in full without a tax cut

Some things, you must not delay. A visit to the dentist, for instance. Also, submitting Form 15G or 15H if you are eligible to. Being timely on these fronts can avoid those timeless dreads — toothaches and TDS (tax deducted at source).

It’s just about a month into the new financial year — the best time to complete and submit the paperwork on Forms 15G or 15H. Do this and get incomes such as interest on deposits fully, without cuts. Else, the payer, on behalf of the taxman, could keep aside a portion of your income as taxes and give you only the balance.

This TDS pay-as-you-go mechanism is based on the principle that the taxman has the first claim on the money. For instance, if you earn more than ₹10,000 a year as interest on your bank fixed or recurring deposits (₹50,000 in case of senior citizens), the bank will cut 10 per cent of the interest as tax and pay you only the rest.

Now, what if your overall income is low and you estimate that you will not have any tax liability at the end of the year? In this scenario, if the bank has deducted tax at source, you will have to claim this TDS amount as refund at the time of filing your tax return after the end of the fiscal year. This means your money being blocked for several months, and you having to apply to the taxman to get it back.

To avoid this bummer of a situation, the taxman thankfully offers a get-around — in the form of Forms 15G and 15H. Submit one of these to the bank, and get your income in full, no tax deducted.


First, there are different forms for the young and the elderly. So, if you are under 60 and want to be out of the TDS net, you have to submit Form 15G. This form can be submitted by individuals and also Hindu Undivided Families (HUF). If you are aged 60 or more, you need to give Form 15H; only individuals can submit this form. Forms 15G and 15H can be submitted only by those resident in India. So, non-resident Indians (NRIs) cannot submit these forms.

To be eligible to give Form 15G, you need to fulfil two conditions. One, your estimated total income (taxable income after considering deductions) should not be above the tax exemption limit (₹2.5 lakh currently). This essentially means that your estimated tax liability for the year should be nil. Next, your aggregate interest income should not be above the tax exemption limit (₹2.5 lakh currently).

Say, you expect to get ₹2.75 lakh as interest and ₹1.25 lakh as other income over the year; that’s ₹4 lakh in total. If you invest ₹1.5 lakh in tax-saving Section 80C instruments, your taxable income will be ₹2.5 lakh, the tax exemption limit. So, you fulfil the first condition. But despite this, you are not eligible to submit Form 15G. That’s because you don’t fulfil the second condition — as your interest income (₹2.75 lakh) is higher than the tax exemption limit.

The taxman is more lenient with senior citizens though. You need to fulfil just one condition to be eligible to submit Form 15H. So, only the taxable income should not exceed the tax exemption limit. If so, you can submit Form 15H, even if your interest income exceeds the tax exemption limit (currently ₹3 lakh for those between 60 and 80 years of age, and ₹5 lakh for those over 80).

To whom, when and how?

Not just to banks, forms 15G or 15H can also be submitted to some other income payers such as companies issuing bonds, employee provident fund organisation (EPFO), tenants (non-individuals) who pay rent, and insurance companies that pay commission.

Banks determine whether TDS is applicable based on estimated interest income across all branches. To avoid TDS on bank fixed or recurring deposits, Form 15G or 15H has to be given to every bank branch where the annual interest income from such deposits is expected to exceed ₹10,000 (₹50,000 in case of senior citizens).

Companies issuing bonds are supposed to deduct tax at source at 10 per cent if the annual interest payment exceeds ₹5,000. If you withdraw your EPF balance before five years of continuous service and the withdrawal amount is ₹50,000 or more, the EPFO has to deduct tax at 10 per cent. Non-individual tenants are supposed to deduct tax at 10 per cent if the annual rent exceeds ₹1,80,000 a year. Submitting Form 15G or 15H, if eligible, to such payers can help you avoid the TDS.

Make sure to mention the PAN along with the form 15G or 15H. Else, the form will be invalid and the payer will deduct tax at 20 per cent or a higher rate.

Earlier, these forms had to be submitted in paper form. But since a few years, online submission of the forms to tax deductors is also allowed. While the forms can be given any time in the financial year, it is best to do so early before the first tax deduction happens. That’s because once the tax is deducted, the payer cannot reverse the entry. So, you will have no other option but to claim it as refund in your tax return.

You need to submit fresh forms each year as they are valid only for a year.

Published on May 05, 2018

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