April, which marks the beginning of the financial year (FY), is a good time to plan one’s financial matters. Planning is even more important for senior citizens who have income below the taxable limits so that unnecessary taxes are not deducted. Typically, any income above Rs 10,000 received as interest on fixed deposits with banks or on securities is subject to tax deduction at source (TDS). This could result in blocking of cash for senior citizens who have zero tax liability.
Keeping this in mind, the tax laws allow a self-declaration to be filed through Form 15H stating that tax on the individual’s estimated total income for the FY is nil. Based on such a declaration, the bank, mutual fund or any other payer of income will waive the TDS.
Who can submit Form 15H
Form 15H is available to any senior citizen who is a resident of India and whose tax liability during the financial year is expected to be nil.
For tax purposes, a ‘senior citizen’ is an individual who is above 60 years of age, or who turns 60 years at any time during the financial year.
Residential status under tax laws is determined on the basis of the number of days the person is physically present in India. This facility is not applicable to non-residents.
Resident individuals who are younger than 60 years and have no taxable income can submit a declaration through Form 15G along similar lines to avoid TDS.
When to submit Form 15H
Form 15H is valid only for one FY. A fresh Form 15H should be submitted at the beginning of each FY (in early April itself), so that TDS is waived immediately.
Even in the case of FD’s having a tenure of more than one year, Form 15H should be filed every year.
The reason for submission of Form 15H every year is the possibility of an individual’s financial position changing from time to time, resulting in his income becoming taxable. Therefore, the ‘nil’ tax liability situation of an individual is required to be assessed every year.
All is not lost even if TDS has already been deducted due to Form 15H being filed later in the year, or not being filed at all. The bank or any other party deducting tax will issue a certificate called ‘Form 16A’, which has the details of TDS during the year. The individual should then file a tax return quoting details from Form 16A and claim a refund of excess TDS. You can keep a check on your Form 26AS (a tax credit statement according to the income tax authority’s records) which can indicate immediately if any taxes have been paid in your name.
Procedure for filing
Form 15H is required to be filed in duplicate. The information required to be provided in Form 15H has recently been increased. Individuals can download Form 15H from the bank’s website or the website of the income tax department and submit two signed copies. One can also obtain a blank Form 15H from the tax office. It is a good idea to confirm with the bank after a few days whether Form 15H has been taken into account or not.
Information to be provided
Apart from personal details, such as the individual’s name, age, address, telephone number and email, among others, an individual is also required to provide the details of the tax office where he or she is assessed. The current form also asks for details of one’s estimated income during the year from sources such as dividend from shares, interest on securities, interest on deposits with banks, income from units of mutual funds, or withdrawal from National Savings Scheme.
Filing of Form 15H in a timely manner is of great benefit to senior citizens whose tax liability for the year is estimated to be nil. Though refund of excess TDS can be claimed by filing a tax return, it’s a cumbersome procedure and also results in money being blocked. Therefore, it would be prudent to estimate one’s income and tax liability at the beginning of the financial year and file Form 15H in April.