Form 15G/15H: Why You Need to Submit It Now to Stop TDS on Your Fixed Deposits

If you rely on interest from Fixed Deposits (FDs), Recurring Deposits (RDs), or corporate bonds, you might be losing 10% of your earnings to Tax Deducted at Source (TDS) unnecessarily. The Income Tax Act empowers banks to deduct TDS before crediting interest to your account if it exceeds a certain threshold. However, if your total income is below the taxable limit, this deduction is completely avoidable.

For Financial Year (FY) 2025-26 (Assessment Year 2026-27), failure to submit the correct declaration—Form 15G or Form 15H—means the bank will deduct TDS, forcing you into the cumbersome process of filing an Income Tax Return (ITR) solely to claim a refund. It is highly recommended to submit these forms before the banking year closes on March 31st to prevent final quarter deductions.

Understanding the TDS Threshold on Interest

Banks do not deduct TDS on every rupee of interest. Deduction is triggered only when the total interest earned from all branches of a specific bank exceeds a specified threshold in a financial year.

If your estimated interest exceeds these thresholds, the bank will deduct TDS at 10%. If you fail to provide a valid PAN along with your account, the penal TDS rate jumps to 20%.

The Eligibility Criteria for Filing

You cannot submit these forms simply because you do not want to pay tax. Filing a false declaration is a punishable offense. You must meet specific legal conditions.

Conditions for Form 15G (Below 60 years)

1. You must be a resident Indian individual or a Hindu Undivided Family (HUF). Non-Resident Indians (NRIs) cannot use Form 15G.
2. Your final tax liability for the financial year, calculated on your total estimated income, must be Nil.
3. The Restriction Condition: Your total interest income (from FDs, RDs, etc.) must be less than the basic exemption limit applicable to you. Under the New Tax Regime (the default for AY 2026-27), the basic exemption limit is ₹4 lakh. Under the Old Regime, it is ₹2.5 lakh.

Conditions for Form 15H (Senior Citizens)

1. You must be a resident Indian senior citizen (aged 60 years or more at any time during the financial year).
2. Your final tax liability for the financial year must be Nil.
3. Crucial Difference: Unlike Form 15G, senior citizens can submit Form 15H even if their total interest income exceeds the basic exemption limit (₹4 lakh in both regimes for seniors), provided their final tax liability (after Chapter VI-A deductions like 80TTB) remains zero.

Legal Reference: The Statutory Declaration

These forms are statutory self-declarations governed by specific provisions under the Act.

Section 197A (No Deduction in Certain Cases)—This section of the Income Tax Act 2025 (formerly 1961 Act) allows individuals to submit a declaration in writing (Form 15G or 15H) to the payer (the bank), stating that the tax on their estimated total income of the previous year will be nil. Once a valid declaration is received, the payer is prohibited from deducting TDS under Section 194A (interest other than interest on securities).

Common Mistakes When Submitting Form 15G/15H

1. Submission After TDS Deduction: Form 15G/15H stops future TDS deductions; it cannot reverse past deductions. If a bank has already deducted TDS in Q1, Q2, or Q3, submitting the form now will only prevent the Q4 deduction. To recover the previously deducted TDS, you must file an ITR.
2. Forgetting to Submit Annually: These declarations are valid for only one financial year. You must submit a fresh Form 15G/15H every April to ensure uninterrupted, TDS-free interest credits.
3. Failing to Submit to All Branches/Banks: If you have FDs across multiple banks (e.g., SBI, HDFC, ICICI), you must submit a separate form to each bank. The threshold applies per banking company, not per branch, so consolidating forms at your home branch usually suffices for that specific bank.

Action Steps Before March 31st

Review your bank statements or utilize your net banking portal to check your accrued interest for FY 2025-26. Most major banks allow you to generate and submit Form 15G or 15H entirely online without visiting a branch.

If you are a senior citizen ensuring your tax liability falls to zero, make sure to consider specific deductions available to you. Need help navigating senior tax benefits? Review our comprehensive Senior Citizen Tax Guide AY 2026-27. If your income necessitates paying tax, ensure you calculate it accurately before the Advance Tax Q4 Deadline.