15g &15 h

The main difference between Forms 15G and 15H is that Form 15G is meant for non-senior citizens whereas Form 15H is meant for senior citizens only.
In order to be eligible to furnish Form 15G, the non-senior citizen investor needs to fulfill the following two conditions:

1. The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil; and
2. The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab which is Rs1,80,000 for men and Rs1,90,000 for women.

If both these conditions are satisfied, Form 15G may be furnished to the bank or the post office and the entire interest income can be received without tax deduction.

To further understand these provisions, let’s take the example of Shah, who is 55 years old. Shah’s total income is Rs2,90,000, of which Rs1,90,000 is earned by way of interest from bank deposits. Shah also invests 1,00,000 under Section 80C and pays a medical insurance premium of Rs15,000. Is Shah eligible to furnish Form 15G? This can be ascertained by finding out if he satisfies both the above conditions. The first condition is that Shah’s final tax liability should be nil. Though Shah’s gross income is Rs2,80,000 lakh, on account of his Section 80C and Section 80D deductions of Rs1,00,000 and Rs15,000 respectively, the net income falls to Rs1,75,000 lakh and consequently he is not liable to pay any tax.

Therefore, Shah satisfies the first condition. However, we find that since his interest income of Rs1,90,000 is more than the basic exemption limit of Rs1,80,000. Shah doesn’t satisfy the second condition and hence he is not eligible to furnish Form 15G to the interest paying organisation.

Form 15H imposes just the first condition, in that, the final tax on the investor’s estimated total income computed as per the provisions of the Income Tax Act should be nil. The second condition imposed by Form 15G is not applicable in the case of Form 15H.

For example, say Mehta, 68 years old, has a total income of Rs3,00,000, out of which Rs45,000 is earned from the senior citizens saving scheme and the rest from bank deposits. He invests Rs50,000 in PPF. Now, is he eligible to furnish Form 15H?

As pointed out earlier, all Mehta has to do is to ascertain his final tax liability. It doesn’t matter what amount he receives from which source; this information is irrelevant for Form 15H. We find that Mehta’s net income works out to Rs2,50,000 (Rs3,00,000 - Rs50,000). As the basic exemption limit for Mehta is also Rs2,50,000 (on account of him being a senior citizen), his net tax liability is nil and hence he is indeed eligible to submit Form 15H.