Senior citizens, FD investors alert: Don't miss this form to avoid TDS on interest income

Senior citizens and fixed deposit (FD) investors whose total income falls below the taxable limit can avoid unnecessary Tax Deducted at Source (TDS) on interest income by submitting the appropriate self-declaration form to their banks or financial institutions. While many taxpayers wait to claim refunds after filing their Income Tax Returns (ITRs), filing Form 15H or Form 15G, depending on eligibility, can help prevent TDS from being deducted in the first place.

Under the current income tax rules, banks are required to deduct TDS on interest income once it crosses the prescribed threshold. However, if a taxpayer's total tax liability for the financial year is nil, they can submit a self-declaration to request that no tax be deducted from their interest earnings.

Form 15H for senior citizens

Form 15H is specifically meant for resident individuals aged 60 years or above. It allows eligible senior citizens to receive interest income without TDS deduction, provided their estimated tax liability for the financial year is zero.

Many retirees rely on interest earned from fixed deposits and other savings instruments as a primary source of income. Even if the income remains below the taxable limit, TDS deducted by banks can temporarily reduce cash flow until the refund is claimed through the ITR process. Filing Form 15H at the beginning of every financial year helps avoid this situation.

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Form 15G for other eligible taxpayers

For taxpayers below the age of 60, Form 15G serves a similar purpose. It can be submitted by resident individuals and Hindu Undivided Families (HUFs) whose estimated tax liability for the financial year is nil and whose total income, after eligible deductions and exemptions, remains below the taxable limit.

The primary difference between the two forms is age. Form 15G is meant for eligible taxpayers below 60 years, while Form 15H is reserved exclusively for senior citizens.

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Where can these forms be submitted?

Taxpayers can submit Form 15G or Form 15H to multiple deductors, including banks offering fixed and recurring deposits, post offices, insurance companies, the Employees' Provident Fund Organisation (EPFO), companies paying dividends, mutual fund houses and other financial institutions.

The forms can usually be downloaded through the bank's internet banking portal, the Income Tax Department's e-filing website or the EPFO portal. Since the declaration is not permanent, it must be submitted every financial year. Taxpayers with deposits across multiple banks may also need to submit separate forms to each institution.

Don't forget these points

Before filing either form, taxpayers should carefully estimate their total annual income and ensure they genuinely have no tax liability. Providing incorrect information or making a false declaration may attract penalties under the Income Tax Act. It is also important to quote the correct Permanent Account Number (PAN) while submitting the declaration.

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What if TDS has already been deducted?

If the form was not submitted in time and TDS has already been deducted, taxpayers can still recover the amount by filing their Income Tax Return. The deducted tax will be reflected in Form 26AS and the Annual Information Statement (AIS). After reporting the interest income and claiming TDS credit in the ITR, any excess tax deducted will be refunded by the Income Tax Department, subject to eligibility.

Form 121 from FY27

The government has also announced that Form 15G and Form 15H will be replaced by a unified Form 121 under the Income Tax Act, 2025, with effect from FY 2026-27. Until FY 2025-26, eligible taxpayers should continue using Form 15G or Form 15H based on their age and eligibility. From FY27 onwards, Form 121 will become the single self-declaration form for taxpayers seeking exemption from TDS on eligible income where no tax is payable.

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