As per section 197A of IT Act, 1961, TDS need not be deducted in respect of persons who submit a declaration in Form 15G (Regular) and Form 15H (Senior Citizens). Form No.15G/15H shall not be accepted in the case of NRO a/c holders.
Declaration in Form 15G/15H, if submitted, shall be invalid unless the correct PAN is furnished in the declaration and consequently interest payable to such customer shall be liable for deduction of tax at source at higher rate of 20%.
However, acceptance of Form 15G and Form 15H are subject to the following:
- Tax on the estimated total income (of the depositor) for the financial year is nil and
- The aggregate amount of interest credited or paid or likely to be credited or paid during the financial year is not more than the maximum amount which is not chargeable to tax.
Please note that the depositor has to submit Form 15G / Form 15H at the beginning of every year (i.e. in April) or at the time of opening of term deposits in triplicate,
The form (15G /15H) can be downloaded from the website http://www.incometaxindia.gov.in/. This form should be filed before the interests begin to accrue in the fixed deposit account, since the declaration has no retrospective effect.