Friday, May 5, 2017

Form 15H and 15H - the mess created by the Ministry of Finance

Form 15H and 15H: the mess created by the Ministry of Finance

Every Income Tax payer knows he has to submit form 15H or 15G in order to avoid TDS on the income from FDs and other certain sources of income. Filling up Form 15H or 15G for interest on FD in banks poses many problems, especially for senior citizens.

There is even now (2017) a bank I know that gives you decades old Form 15H and God knows what happens to that form after handing it over to bank. But, I like it because the form then is the  simplest to fill and bank staff are very co-operative / courteous.

There is another big bank – Syndicate for instance – that asks you to come to the branch, bring passbook, PAN card (so far the guys haven’t yet asked for Aadhar!); they give you a specially printed Form 15H / 15G to sign and handover. From the tax payer’s point of you this saves filling of forms. The bank’s software takes care to cumulate all your FDs in that branch into one form.  But  you cannot fill up the form yourself on forms bought elsewhere and submit them.

In my case I prepare Form 15H In MsWord format, fill in common data on soft copy itself, thereafter fill data specific to the FD / Bank concerned by hand; Make three copies and give it to bank for acknowledgement.  This method makes bank to fill up latter part (declaration by bank) by themselves which involves extra labour; so the bank insists on submitting the form in their style.

There are some banks / companies that send the pre-printed form by post and ask you to return the filled up form. Such forms ever reach them thanks to postal department’s inefficiency. Even when it reaches there is no guarantee that a note is made of your form submission.

In my case, I do the investment paper work for my daughters who live away from Hyderabad. Sending forms by courier, getting them signed and submission are all hassles, especially senior citizens like me during summer.

Another unsettling – moot - point is this: What is the position of an FD maturing midway? The interest earned till maturity (say in August) may not attract tax and no TDS may be needed. I may not renew the FD at all and cannot include income which I don’t earn or am not sure of getting. Is it not enough if I submit 15H at the time of renewal of FD? But Syndicate Bank insists that I give 15H in April itself. Are they right? Can TDS be deducted without waiting for the interest earned to cross the threshold limit and then start collecting TDS? Can someone educate me about rules?

My request to MoF is not to tighten the rules regarding 15H or 15G. Rather I am asking them to do away with these forms altogether. Lot of work for all – investor, banks, MoF – concerned can be saved. Our Indian government is blissfully unaware of “compliance costs” at tax payer’s end.  

Alternately, the investor can declare in the FD application itself stating that the amount earned via that investment will be within the requirements for filling 15H / 15G. Just like PAN or age proof this will be another piece of essential data, if applicable to the investor.

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