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Filing of Forms 15G or 15H, subject to relevant conditions, can help you enjoy the benefit of no TDS!
  Although the net of tax deduction at source (TDS) has been considerably widened in the past few years, there are provisions to enable you to avail of no deduction of TDS from your income.

    Section 194A of the Income-tax Act provides for tax deduction at source (TDS) at 10% out of interest payments exceeding Rs.10,000 in a financial year.  However, with a view to grant relief to persons who are not under liability to pay any income-tax, special provisions have been made under Section 197A, which permit the benefit of no tax deduction even on interest payments exceeding Rs.10,000.  


Any person other than a company or a firm can avail this benefit if the income-tax payable on the estimated total income of that person during the relevant financial year is nil.  This benefit can be availed by filing with the person making the payment of interest, a declaration in the prescribed form (in duplicate) as under:

  • Form 15G by a resident person other than a senior citizen

  • Form 15H by a resident senior citizen (being a person of the age of 60 years or more )

Section 197A(1B) provides that the above benefit of no TDS cannot be availed in a case where the amount of interest to be received exceeds the maximum amount not chargeable to income-tax, though the concerned person may not be under liability to pay tax on his total income keeping in view the benefit of any deduction or rebate.     

From FY 2012-13, the basic exemption limit (representing the maximum amount not chargeable to income-tax) for both resident male and female taxpayers is Rs.2,00,000 and accordingly the declaration in Form 15G can be filed in all cases where the interest payment does not exceed Rs.2,00,000.

Section 197A(1C) grants a special concession to resident senior citizens, under which the above condition in relation to the amount of interest not exceeding the maximum amount chargeable to income-tax has been waived.  Thus, if in the case of a senior citizen aged 60 years and above or a super senior citizen aged 80 years and above, the tax payable on his total income is Rs. nil, keeping in view the benefit of the higher exemption limits of Rs.2,50,000 or Rs.5,00,000 in their case and other deductions under Sections 80C, 80D etc., the privilege of no TDS can still be enjoyed, even if the amount of interest in their case exceeds the aforesaid basic exemption limits of Rs.2,50,000 or Rs.5,00,000.

    The above aspects can be better understood and appreciated through the replies to the posers below:


Poser: A Senior Citizen has invested Rs.30,00,000 in a Fixed Deposit with a Bank on which he earns interest of Rs.2,70,000 at 9% per annum.  His annual Pension is Rs.60,000 and he has invested Rs.1,00,000 in eligible investments entitled to deduction under Section 80C.  Can he file a Declaration in Form 15H in FY 2012-13 and avail the benefit of no TDS?

Reply:  After deducting Rs.1,00,000 under Section 80C from the gross total income of Rs.3,30,000 (2,70,000 + 60,000), the taxable income of the senior citizen will be Rs.2,30,000.  However, the tax payable on the same for FY 2012-13 being Rs. Nil, in view of his exemption limit being Rs.2,50,000, he can file Form 15H with the Bank and receive the entire interest without any TDS.


Poser:  A Trust or AOP earns interest of Rs.1,90,000 at 9.5% per annum on a Bank Deposit of Rs.20,00,000.  If it has no taxable income in FY 2012-13, can it file Form 15G and receive interest, free of TDS?

Reply:  Yes.  It needs to be borne in mind that Form 15G can be filed by any person other than a Company or Firm, which would include not only an Individual or HUF, but also a Trust or AOP.  The exemption limit as applicable in the case of a Trust or AOP from FY 2012-13 is Rs.2,00,000 and hence this Declaration can now be filed in any case where the interest receivable is not exceeding Rs.2,00,000, subject to the condition that no tax is payable on the total income of the concerned person.

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