I forgot to give my bank Form 15G before the interest was paid, what now?
The declaration works forward, not backward. It tells a payer not to deduct on income where no tax will ultimately be payable, so it has to be in the payer's hands before the deduction for that period is computed. Once the bank has deducted and remitted, the branch cannot undo it, and a declaration lodged afterwards affects only later payments. The money is not lost. It stands as a credit against your Indian identifier, and the route to it is the return for that year. Lodge the declaration now for the periods still to come and treat the deducted amount as something the return recovers.
Can Form 15H be backdated once the deduction has already happened?
No, and asking a branch to do it creates a worse problem than the deduction. A declaration is a statement of your estimated position made on the date you sign it, and the payer's own reporting is keyed to the date it held that declaration. Backdating puts the branch behind a deduction it now says it should not have made, and puts you behind a document whose date you cannot support. The sequence that works is a current declaration for the payments still to come, and the return to deal with what has already been deducted.
I am an NRI and my bank accepted my Form 15G, is that a problem?
Yes, whatever the branch said when it took the form. These declarations are for resident individuals inside the eligibility conditions; non-residents are outside them entirely. A declaration filed by an NRI is invalid from the start, which is a different and more serious matter than lodging a valid one late, because the deduction it stopped should never have been stopped. The route that does work for a non-resident is the lower-deduction certificate. We would normally stop the declarations at the branch, establish which years were affected, and deal with the deduction that should have applied through the returns for those years.
Does a late declaration mean a penalty, or just deduction I reclaim?
For a valid declaration lodged late, the ordinary consequence is deduction you reclaim rather than a charge for being late. The declaration is a document handed to a payer, not a return filed with the department, so a payer that did not hold it in time simply deducts as it would have without it. The exposure that does bite is a declaration that was untrue, or one you were not eligible to make, and that is judged by reference to the declaration itself rather than to any delay. So the first question is not how late the form was, but whether you were entitled to sign it.
Do I still have to file an Indian return if the declaration was late?
If deduction has happened, the return is the only thing that brings it back, so in practice yes. The declaration is an instruction to a payer; it is not a filing that settles your year. Where a payer deducted because the declaration arrived after its cut-off, the deducted tax stands to your credit, and the return is what applies that credit against a liability which may well be nil. A year with no tax payable and tax already deducted is exactly the year people leave unfiled, and it is the year with money sitting in it.
What should an NRI file instead of Form 15G to reduce deduction?
The lower-deduction certificate. It is the mechanism built for someone whose deduction at source would exceed the tax the income actually attracts, and unlike the declarations it is open to non-residents. It is applied for rather than simply signed, so it needs preparation, and it has to be in place before the payment or the closing it relates to. Obtained in time, it reduces what the payer holds back at the point of payment. Obtained late, or not at all, the excess sits with the department until a return recovers it. Fixed fees for that application are agreed in writing before work starts.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
What counts as foreign income, and what is a foreign tax?
Foreign income is income sourced outside the country you are filing in — where the work was done, where the property sits, where the payer is resident, depending on the type. A foreign tax, for credit purposes, is a levy imposed by another country that functions as an income tax and that you were legally required to pay. Consumption taxes, property taxes and most social contributions are not, however real the cost. Sourcing is decided by rule, not by which bank received it. See the foreign tax credit.
