The basic conditions for filing 15G are—the final tax on estimated total income computed as per the Income Tax Act should be nil; and, the aggregate of the interest (excluding interest earned on securities) received during the financial year should not exceed the basic exemption slab of Rs 2.5 lakh. If these criteria are met, you can submit Form 15G and the entire interest income would be credited without any tax cut.
You need to meet both the criteria. Even if the interest income is less than the basic exemption allowed during that financial year, but your total tax liability is not nil, you will not be eligible for filing Form 15G. The reverse is also true. Say your income is Rs 4 lakh, of which Rs 3 lakh is earned as interest from the bank. You might invest Rs 1.5 lakh in PPF and be out of the tax net, but you are not eligible for Form 15G as though your tax liability is zero, the interest income is higher than the basic exemption of Rs 2 lakh. The refund route is your only recourse.
Form 15H can be only filed by individuals above 60 years of age.
This form imposes only the first condition, that is, 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 to Rs 3 lakh for you to be eligible for 15H. For super senior citizens above 80 years, this limit is Rs 5 lakh.
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.
While Form 15G is for Indian residents below 60 years of age, HUFs and trusts, Form 15H is for individuals above 60. NRIs cannot avail TDS exemptions.
The repercussions of wrong filing is stiff. A false or wrong declaration in Form 15G attracts penalty under Section 277 of the Income Tax Act. "Prosecution includes imprisonment ranging from three months to two years, and a fine.
The forms should be submitted at the beginning of the year to avoid a situation where the bank has already deducted the tax. Fresh forms are required to be filed each year as your income may differ from year to year. If your income estimates increase in the middle of the financial year after you submit the forms, you will have to submit a 15G withdrawal application to the bank mentioning the correct particulars and reason of change.