Form 15G and 15H — avoiding TDS on mutual fund dividends

Section 194K mandates TDS at 10% on mutual fund IDCW (dividend) payments to resident investors where the aggregate dividend from the fund in a financial year exceeds ₹5,000. If your total income for the year will be below the basic exemption limit, the TDS represents an interest-free loan to the government that you reclaim at ITR filing. Form 15G (for under-60) and Form 15H (for senior citizens) let you skip this withholding entirely.

Eligibility for Form 15G

Form 15G is for resident individuals below age 60, where:

• The estimated total income for the financial year will be below the basic exemption limit (₹3 lakh under new regime, ₹2.5 lakh under old).
• The total tax payable on the estimated total income will be Nil.
• The aggregate of all incomes for which the form is being submitted does not exceed the basic exemption limit.

If both conditions are not met, you cannot submit 15G. Submitting falsely is treated as a false declaration with penalties under Section 277.

Eligibility for Form 15H

Form 15H is for resident senior citizens (age 60 and above). The conditions are similar to 15G but slightly relaxed:

• Estimated total income such that tax payable will be Nil after allowing for Section 87A rebate.
• No upper cap on the aggregate of incomes (whereas 15G has the cap).

For super senior citizens (80+), the basic exemption limit under the old regime was ₹5 lakh; this difference matters less now under the new regime which has a uniform ₹3 lakh exemption.

When to submit

Submit the form to the AMC before the first IDCW of the financial year. The form remains valid for that financial year only; you must re-submit each year. Most AMCs accept online submission through their investor portal; some require physical signed copies.

If you have multiple folios across the same AMC, one form covers all of them. Across different AMCs, you submit separately to each.

What happens if you submit late

If TDS has already been deducted on an earlier IDCW before you submitted Form 15G/15H, that TDS is not refunded by the AMC. You claim it as credit in your ITR and receive a refund (after the ITR is processed, typically 30-90 days). The form prevents future TDS for the remainder of the year.

What it does not cover

• Capital gains TDS: Form 15G/15H does not apply to capital gains TDS for NRIs. The forms are for resident individuals only.
• Section 195 TDS on NRI payments cannot be avoided by 15G/15H — only DTAA-based relief or final-tax reconciliation works there.
• Aggregate threshold: if you submit 15G with declared income of ₹2 lakh and then earn beyond the exemption limit through other income heads not declared in the form, the false declaration risk applies.

Documentation to keep

• Acknowledgement of submission from the AMC (typically a system-generated receipt).
• The form itself: AMCs are required to keep these on file and report quarterly to the Income Tax Department.
• Cross-reference with the AMC's quarterly TDS return (Form 26Q) at year-end to verify no TDS was wrongly deducted.

For pensioners living off SWP and IDCW

A common scenario: a senior citizen has a small pension and a multi-crore MF corpus generating IDCW. Pension is taxed at slab; IDCW above ₹5,000/year/fund would have TDS at 10%. By submitting Form 15H proactively if total income (pension + IDCW + STCG + LTCG above exemption) will be below the basic exemption + 87A rebate threshold, the senior citizen avoids the TDS cycle entirely.

If the senior's primary income is SWP (capital gains rather than IDCW), Form 15H does not help — capital gains TDS is not within scope. SWP is structurally more tax-efficient than IDCW for low-income retirees for this reason.

Multiple-fund logistics

If you hold positions across 8 AMCs and qualify for 15G/15H, you submit the form to each AMC separately at the start of the FY. Many AMC investor portals now offer a "submit 15G/15H" button. Setting this up annually as part of the January-April filing routine prevents the small TDS leak that adds up across funds.