Form 15H is a declaration for Indian senior citizens (60 years and above) to prevent tax deduction at source (TDS) on interest income. It is used when their total income for the financial year is below the basic exemption limit. It must be submitted annually at the start of the financial year or when making a new deposit. It declares that the individual’s income is below the taxable limits. The form is submitted online or in person, and requires the individual’s Permanent Account Number (PAN), address, and income details.
Says Ritika Nayyar, partner, Singhania & Co, a law firm: “Form 15H helps senior citizens avoid unnecessary TDS deductions. Banks and other financial institutions are responsible for deducting tax at source (TDS) on interest income on fixed deposits, recurring deposits, etc, for all taxpayers if this exceeds a minimum threshold. If the total taxable income for a financial year for a senior citizen, after considering any applicable rebates like Section 87A, is below the basic exemption limit, it would mean that he will not have any income tax liability during the year.”
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Therefore, it means his income is low enough that no tax would be due even before TDS is considered. So, filing Form 15H would inform the banks/ financial institutions that they should not deduct TDS on any such income from such senior citizen taxpayers who have filed Form 15H. This will ensure no tax is deducted on their interest income, and they receive such income in full. This is particularly helpful in planning their finances.
TDS is normally deducted by banks/financial institutions when the interest income exceeds Rs 50,000 per year for senior citizens under Section 194A of the Income-tax Act, 1961.
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“However, by submitting Form 15H, a senior citizen declares that their total income is below the taxable limit, and therefore, the bank or payer need not deduct TDS on their interest income. This helps senior citizens receive their income in full, without needing to claim a refund later,” says SR Patnaik, partner (head - taxation), Cyril Amarchand Mangaldas.
Things to Keep in Mind
It is important that this Form is filed at the beginning of the year, preferably in the month of April itself.
Says Nayyar: “This form will need to be filed separately for each bank where they may have their deposits. They must accurately estimate their income for the upcoming financial year, their personal details, PAN, etc., and ensure that they are eligible to take the benefit of no deduction of tax through this Form both in respect of age and total income for the year.”
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Filing Form 16 late, providing incorrect PAN, and declaring incorrect estimated income are some of the common errors when filing Form 15H, which should be avoided. Also, the senior citizen must ensure that the basic eligibility conditions are met, their total worldwide income is below the taxable threshold. One thing to keep in mind is that wrongful declaration can attract a penalty under Section 277 of the Income-tax Act, 1961.
