Form 15G & 15H: Stop TDS on FD Interest

If your total income is below the basic exemption limit but you have fixed deposits, the bank still deducts 10% TDS once interest crosses Rs. 40,000 (Rs. 50,000 for senior citizens). Form 15G (under 60) and Form 15H (60+) are the legal way to tell the bank not to deduct that TDS — saving you a refund cycle of 6-12 months. This guide explains who can file, when, and the heavy penalty for filing falsely.

Why TDS on FD interest exists

Under Section 194A, banks must deduct 10% TDS on interest income paid in a financial year above the threshold:

• Rs. 40,000 for individuals below 60 (raised from Rs. 10,000 in Budget 2025)
• Rs. 50,000 for senior citizens (60+)
• Rs. 5,000 for non-banking entities (cooperatives, post offices)

This applies even if your total annual income is well below the basic exemption limit (Rs. 3 lakh under New Regime). The bank does not know your full tax picture; it just deducts.

Who can file Form 15G

Form 15G is for resident individuals below 60 (and HUFs) who meet both of these conditions for the financial year:

1. Estimated total income (including this interest) is below the basic exemption limit (Rs. 3 lakh New Regime / Rs. 2.5 lakh Old Regime)
2. Estimated total tax liability for the year is nil

If you fail either test — for example, your salary already exceeds Rs. 3 lakh — you cannot file Form 15G. Filing it falsely is a criminal offence under Section 277 (3 months to 7 years imprisonment + fine).

Who can file Form 15H

Form 15H is for resident senior citizens (60+) and is more lenient:

• Estimated tax liability for the year must be nil — no income limit, just the tax liability test
• Available even if total income exceeds basic exemption, provided deductions/rebates bring tax to zero
• Rebate under Section 87A makes income up to Rs. 7 lakh effectively tax-free (New Regime), so most senior citizens with FD interest below Rs. 7 lakh + other income can use 15H

When and how to file

Submit at the start of the financial year (April), separately to each bank/branch where you hold deposits. You cannot file once at one bank and assume it applies everywhere — every deductor needs its own copy.

Most banks accept it through three channels:

1. Net banking — login → fixed deposits → submit Form 15G/15H
2. Branch — physical signed form
3. Email to the bank's designated 15G inbox (with PDF attached)

Once accepted, the bank tags your account "no TDS" for that FY. Re-submit every April; it does not auto-renew.

Worked example

Mrs. Iyer, 65, a retired teacher with no other income, holds Rs. 20 lakh in bank FDs earning 7.25% — annual interest Rs. 1,45,000. Her total income for FY 2025-26 is just the FD interest. After standard deduction (Rs. 50,000 for senior citizens with pension OR none here as no pension), her taxable income is Rs. 1,45,000 — well below the Rs. 3 lakh basic exemption.

Without Form 15H: Bank deducts 10% TDS = Rs. 14,500. She must file ITR and wait 6+ months for the refund.

With Form 15H filed in April: No TDS deducted. The full Rs. 1,45,000 hits her account during the year. She still files ITR for record but no refund cycle.

Penalty for false declaration

Common misuse pattern: Salaried employees with taxable income try to use 15G to dodge TDS on a small FD. The bank may accept the form, but when AIS shows your actual income, the IT Department issues a 143(1) notice and may pursue prosecution.