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Stop Banks Cutting TDS on Your FD Interest: Form 15G and 15H
If a chunk of your bank interest quietly disappears every quarter, this is where it goes. Banks are required to deduct TDS (tax deducted at source) on fixed deposit interest once it crosses a yearly limit, and for crores of small savers and retirees that deduction is pure friction — money locked up with the taxman until you file a return to claw it back. Form 15G and Form 15H exist precisely to stop that from happening when you owe no tax in the first place. Used correctly, they keep your interest in your hands instead of in a refund queue.
What actually triggers the deduction
A bank cuts TDS not on your deposit, but on the interest it pays you, and only after that interest crosses a threshold in a financial year. Budget 2025 raised those thresholds with effect from FY2025-26. For a regular depositor under 60, the bank starts deducting only once your interest from that bank tops ₹50,000 in the year, up from the old ₹40,000. For senior citizens, the limit is now a far more generous ₹1,00,000, double the earlier ₹50,000.
The rate, once you cross the line, is 10% — provided your PAN is on file. Skip the PAN and the bank is forced to deduct at 20%, and any 15G or 15H you submit is treated as invalid. So the first rule is dull but non-negotiable: make sure your PAN is correctly linked to every deposit.
One catch trips people up. The threshold is counted bank-wise, and interest is added across all your deposits and branches at the same bank. Spreading FDs across three banks can keep each below the limit, but it does not change whether you actually owe tax — it only changes whether TDS gets deducted.
Two forms, one job, different rules
Both forms tell the bank the same thing: don't deduct, because my income is too low to be taxed. The split is purely by age.
- Form 15G is for resident individuals below 60 and for HUFs.
- Form 15H is for resident senior citizens, aged 60 and above.
The difference that matters is the eligibility test. Form 15G has a strict, two-part condition: your estimated total income for the year must be below the basic exemption limit, and your final tax liability must be nil. Form 15H is kinder. A senior citizen can submit it as long as the final tax payable is nil after rebates, even if total interest income looks large on paper. That single relaxation is why retirees living off deposit interest lean on 15H so heavily.
Neither form is a way to dodge tax. They are self-declarations made under penalty. If you sign one knowing your income is taxable, you are making a false statement, and the law treats it as exactly that.
Why the new tax regime makes this bigger than it looks
Here is the twist most people miss. Under the new tax regime, income up to ₹12 lakh effectively carries no tax once the rebate is applied. That pulls a huge number of pensioners and modest earners into nil-tax territory — people who clearly owe nothing for the year but will still see TDS chipped off their FDs unless they act.
For a 68-year-old whose only income is ₹6 lakh of FD interest, the maths is stark. No tax is due for the year, yet without a Form 15H the bank may withhold ₹60,000-plus over the year, money that sits idle until the refund lands months later. The form converts a forced, interest-free loan to the government into cash that stays in the account, compounding.
How and when to file it
Timing is the part people get wrong. These forms are valid for a single financial year only, so a fresh declaration is needed every year — ideally in April, before the bank's first interest credit. File it late and any TDS already deducted in that quarter is gone from your hands until you file your return.
A clean way to do it:
- Estimate your total income for the year, including all interest, and confirm your tax works out to nil.
- Pick the right form — 15G if under 60, 15H if 60 or above.
- Submit it to every bank where you hold deposits, and at each branch if the bank asks. Most banks now accept it through net banking or the mobile app in minutes.
- Note the unique acknowledgement number the bank generates; it is your proof.
- Repeat the whole exercise at the start of the next financial year.
Don't forget that the same forms work beyond bank FDs. They apply to interest on company deposits, certain bonds, EPF withdrawals in some cases, and post office deposits — anywhere TDS on interest might bite and your income is below the taxable line.
If the deduction already happened
Missed the April window, or crossed the threshold mid-year? There is no shortcut to undo a deduction already made. The bank cannot reverse TDS once it has been deposited with the government against your PAN. Your only route is to claim it back as a refund when you file your income tax return.
The good news is that the deducted amount is fully traceable. It appears in your Form 26AS and your Annual Information Statement (AIS), both visible on the income tax portal. File your return, the system matches the TDS credit, and the refund flows back to your bank account, usually within weeks. Tedious, but nothing is lost — which is exactly why the smarter move is to file the form early and skip the round trip altogether.
The mistakes that cost people money
A few errors come up again and again. People submit 15G when their income is actually above the exemption limit, assuming it simply stops TDS — it doesn't erase the tax they owe, and it can invite a notice. Others file at one bank but forget the second and third where smaller FDs sit. Many seniors don't realise the ₹1 lakh threshold is new and keep submitting forms they no longer strictly need for smaller deposits, while younger savers ignore the forms entirely and overpay all year.
The principle to hold on to is simple. Form 15G and 15H are not loopholes; they are a declaration that you genuinely owe no tax this year. If that's true for you, filing the right one in April is among the easiest financial chores you can do — and it quietly keeps thousands of rupees working for you instead of waiting in a refund line.
