There are two ways in which a tax is deducted from source, one by your employer in the absence of investment declaration. Secondly, in the form of tax deducted at source by banks or financial institutions over the interest income. While one can take care of the employer deducted taxes by submitting investment declaration, but tax deductions by banks or financial institutions depend on your eligibility to submit form 15G/15H.
More About Form 15G and 15H
• Form 15G is meant for individuals below 60 years of age, HUFs and trusts.
• Form 15H is to be filled by those individuals who are above 60 years old.
Criteria For Submitting Form 15G and 15H
Not everyone can simply fill these forms and avoid tax deduction at source. To be eligible to submit Form 15G and 15H, an individual should not have any tax liability after computation of his total income as per the Income Tax Act. Also, the total of interest income, excluding the interest earned on securities, should not be more than the exemption slab, which is Rs. 250,000. If these two criteria are met then, an individual could claim entire interest income by submitting Form 15G or 15H, as per the case.
A person below 60 years, who has a total income of Rs. 3.6 lakh and interest income of Rs. 1 lakh will not be able to submit Form 15G as his taxable income amounts Rs. 3.1 lakh (after deduction of Rs. 1.5 lakh). Similarly, the same person with a total income of Rs. 1 lakh and interest income of Rs. 2.8 lakh will not be able to submit 15G because his total interest income exceeds the exemption limit of Rs. 2.5 lakh.
Misuse Of Forms
An individual held for submitting Form 15G or 15H despite being not eligible is penalized under Section 277 of the Income Tax Act with imprisonment of three months to two years and a fine.