Form 15G

Who Can Submit Form 15G?

• Eligible Individuals: Resident individuals below 60 years of age, Hindu Undivided Families (HUFs), or trusts.

• Income Conditions: Total taxable income (including interest) must be below the exemption limit for the financial year.

• Exemption limits for FY 2025-26: ₹2.5 lakh (old tax regime) and ₹3 lakh (new tax regime).

• Tax Liability: There should be no tax liability for the year.

• Residency: Only Indian residents can submit Form 15G; non-resident Indians (NRIs) are not eligible.

Example

Suppose an individual (age 30) has the following:

• Salary income: ₹2,00,000

• Interest income: ₹60,000

Total income = ₹2,60,000

If the person claims deductions (e.g., under Section 80C), and their taxable income falls below ₹2.5 lakh (old regime) or ₹3 lakh (new regime), and they have no tax liability, they can submit Form 15G to avoid TDS on the ₹60,000 interest income. However, if the total income exceeds the exemption limit, Form 15G will not be applicable.

Key Components of Form 15G

• Name and PAN: Both are mandatory for submission.

• Status: Whether the applicant is an individual, HUF, or trust.

• Financial Year: The form must specify the applicable financial year (e.g., 2025-26).

• Residential Status: The applicant's residential status must be stated.

• Estimated Total Income: The estimated income for the year, including all sources of income.

• Income Sources: Details of income sources such as FD, bonds, etc.

• Declaration of Nil Tax Liability: The applicant must declare that no tax liability exists.

• Signature: Required for validation.

Benefits of Form 15G

• Avoids Unnecessary TDS: If your income is below the exemption limit, no TDS is deducted, so you receive the full interest credited.

• Improved Cash Flow: Access to the full interest income immediately, without waiting for tax refunds.

• Simplifies Tax Compliance: Reduces paperwork by eliminating the need for refund claims.

• Validity: The form is valid for one financial year, requiring submission annually if eligible.

Challenges with Form 15G

• Strict Eligibility: The form can only be used by individuals whose total income is below the exemption limit and who have no tax liability. False declarations can lead to penalties.

• Annual Submission: Form 15G must be submitted every year and at each branch or institution where deposits exist.

• No Exemption from Tax Return: Even if Form 15G is submitted, if your income later exceeds the limit, you must file an Income Tax Return (ITR) and pay the tax due.

• PAN Requirement: The form is invalid without a PAN, and if it is missing, TDS will be deducted at a higher rate of 20%.

• Penalty for Wrong Declaration: Incorrectly submitting Form 15G can result in prosecution and fines.

Conclusion

Form 15G helps Indian taxpayers below the taxable income limit. It lets them avoid TDS on interest income. This form simplifies tax management and improves cash flow since no TDS is deducted. However, taxpayers must check their eligibility and make accurate declarations. This helps avoid penalties and keeps them compliant with tax laws.