Be careful before submitting form 15 G/15H to Banks!

SEBI RIA, Mr Prakash Praharaj

We have been submitting declarations in form 15G(Indian residents below 60 years of age) or 15H (Indian residents above 60 years) to the Banks for not deducting Income Tax TDS on the interest income on deposits kept with the bank. Now TDS has to be deducted if the total interest income from savings bank(s),Recurring deposit(s) and Fixed deposit(s) exceed Rs10,000/- during the year. If your interest income exceeds Rs 10,000 a year, the bank will deduct 10% tax at source.If you do not furnish PAN details, the TDS rate will be higher at 20%. However, you can submit a Form 15G and 15H to avoid TDS on interest income. But the repercussions of wrong filing are stiff from this financial year. A false or wrong declaration in Form 15G/15H attracts penalty under Section 277 of the Income Tax Act. Prosecution includes imprisonment ranging from three months to two years, and a fine. The term can be extended to seven years and fine, where tax sought to be evaded exceeds Rs25 lakhs.


When can you submit 15G?

The basic conditions for filing form 15G are:

(1) The final tax on estimated total income computed as per the Income Tax Act should be nil; and,

(2) The aggregate of the interest received during the financial year should not exceed the basic exemption slab of Rs 2.5 lakhs.

If both the  criteria are met, you can submit Form 15G and the entire interest income would be credited without any tax cut.

 When you can be prosecuted for 15G?

But if the interest income is more than Rs2.5 lakhs per annum or there is a tax liability and you submit form 15 G to the bank,you can be prosecuted as per new rule.

When can you submit 15H?

This form imposes only the first condition;

The final tax on the investor’s estimated total income should be nil. So, if you are above 60, your taxable income for the financial year can be up t o Rs3 lakhs for you to be eligible for 15H. For super senior citizens above 80 years, this limit is Rs 5 lakhs.

When you can be prosecuted for 15H?

There is a tax liability irrespective of interest income and you submit form 15 H to the bank, you can be prosecuted as per new rule.

What can you do?

Since the tax incidence on Bank Deposit is on accrual basis, the TDS has to be deducted every year even if the fixed deposit has not matured. Investing through Debt Mutual Funds are better since the Tax becomes payable only when the holdings are withdrawn. Further indexation benefits are available for withdrawal of Debt MFs after 3 years. So Debt Mutual Funds are better than Fixed Deposits for handling TDS problem. Avoiding TDS by submitting 15G/15H is risky now.

It is better to  consult a SEBI Registered Investment Adviser or a Chartered Accountant before submitting Form 15G/15H to the Bank.

Written by SEBI Registered Investment Advsior, Mr Prakash Praharaj at

Reproduced with permission from SEBI RIA, Mr Prakash Praharaj

About the Author
Shri Prakash Praharaj
 topped the university during his graduation and post graduation in Commerce and has been awarded two gold medals. By training, he is an MBA and he has been awarded a Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is also a CERTIFIED FINANCIAL PLANNER CM and a Certified Personal Financial Adviser with 30 years of experience in the financial services sector under his belt, which include service at financial sector pillars like the Reserve Bank of India, United India Insurance Company, State Bank of India and SBI Life Insurance Company.

During the year 2010, he promoted Max Secure Financial Planners to provide fee-only financial planning advisory services and promote financial literacy. Today, he is a SEBI-registered Investment Adviser and helps plethora of investors to plan their financial lives and achieve their aspirations.

Mr Praharaj is listed on and you can ask him a query at

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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