Individual taxpayers who do not fall in any tax bracket need not rush to submit their forms 15H/15G to their bank branches at the beginning of the financial year. These forms have to be submitted to prevent the bank or the post office from deducting tax on your interest income.
Keeping in mind the disruption and restricted mobility due to the Corona Virus Disease-induced nationwide lockdown, the income tax (I-T) department has said that the forms submitted last financial year will be valid till June 30, 2020. These forms are otherwise valid for only one financial year.
While there is no last date for submitting these forms, it is best to present them at the beginning of the financial year. If you are under 60, the relevant form is 15G, while it is 15H for senior citizens.
Why 15H/G?
You need to submit these forms if your taxable income is less than the basic exemption limit. So, in the financial year 2019-20, for individuals under 60 years of age, this threshold is Rs 2.5 lakh. If are over 60, but less than 80, the level is Rs 3 lakh. If you are over 80 and earn up to Rs 5 lakh, again, you will not fall in the tax bracket. This is more relevant for senior citizens, as they are the ones whose income levels, typically, are less than the exemption limits. Also, they tend to rely heavily on post office and bank fixed deposits for savings, as also for regular income.
In the financial year 2020-21, senior citizens need to tread cautiously while submitting these forms if they choose the new, alternative tax regime announced by Finance Minister Nirmala Sitharaman in the 2020 Union Budget. In this regime, Rs 2.5 lakh is the minimum exemption limit for all taxpayers, including senior (above 60) and very senior citizens (over 80). So, if you are a senior citizen whose taxable income is, say, Rs 3 lakh, and choose this optional tax regime, you cannot ask your bank to not deduct tax from your interest income.
“Most senior citizens are unlikely to opt for the new regime as the existing one is more beneficial for them. They will have to take a call based on their income and deductions they claim currently. Opt for the regime where the tax impact is lower,” says Archit Gupta, Founder and CEO, ClearTax. If you choose to stick to the existing tax regime, the basic exemption limits will continue to be Rs 3 lakh and Rs 5 lakh for senior and very senior citizens, respectively.
The cost of non-submission
If you do not submit these forms, your bank or post office will deduct TDS every quarter on interest income, if it exceeds Rs 10,000 (Rs 50,000 in case of senior citizens), as it does for all depositors, every financial year. The rate of deduction is 10 percent per annum.
However, you can prevent this deduction by submitting 15H/G, if your taxable income is less than the exemption threshold. Essentially, these constitute declarations stating that your income does not exceed the basic exemption limit. If you don’t submit the forms, you can claim a refund while filing your tax return by July 31.
You can collect 15H or 15G from your bank branch, download it from www.incometaxindia.gov.in or your bank website and submit it at your bank branch or relevant post office. If you hold deposits at multiple branches, ensure that you submit the form at all these branches. However, most banks also allow you to complete this process online, which should be the preferred route.
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