Provisions governing Form No.15H and 15G

Posted on: February 13th, 2014 by kcjmadmin

15G and 15H

RECEIVE INTEREST WITHOUT DEDUCTION OF TAX!!!

Furnish Declaration in Form No.15H or 15G and receive your Interest without deduction of Income Tax at source!

Under the provisions of section 197A, no deduction of tax shall be made under section 194A in the case of a Resident Individual if such person furnishes a declaration in writing in duplicate in the prescribed form and verified in prescribed manner to the person liable to deduct tax at source to the effect that the tax on his estimated total income in the previous year in which such income is to be included in computing his total income will be “nil”.

Rule 29C – Declaration by person claiming receipt of certain incomes without deduction of tax

(1)    “A declaration under sub-section (1) by an individual or under sub-section (1A) of the section 197A by a person (not being company or firm) shall be in Form no.15G and shall be verified in the manner indicated therein.”

(1A) “A declaration under sub-section (1C) of section 197A by an individual who is resident in India who is of the age of 65 Years or more at the time during the previous year and is entitled to a deduction from the amount of income tax on his total income referred to in section 88B shall be in Form no.15H and shall be verified in the manner indicated therein.”

Comprehensive analysis of the Rules

Both Rules consist of basic procedures of declaration u/s 197A.

  1. Form 15G – Declaration by resident individual having his estimated net tax payable for relevant Assessment year as ‘Nil’.
  2. Form 15H – Declaration by resident senior citizen having his estimated net tax payable for relevant Assessment year as ‘Nil’. Rule specifically mentions age of 65 Years or more but as apparent from the rule, intention of such bifurcation between Form 15G / 15H seems to communicate different forms for the senior citizens and other individuals. Thus it appears that the CBDT has missed to amend the provisions of the Rule post reduction in the age of senior citizen from 65 to 60 years, therefore, looking to the spirit of the provisions, it may be presumed that the Form No.15H is applicable for senior citizen individuals having an age more than 60 years.
  3. The declaration is required to be furnished in duplicate to the person responsible for deducting tax (i.e. Person responsible for paying “Interest on Securities.”)
  4. Such person responsible for paying “Interest on Securities” shall deliver one copy of declaration to Chief Commissioner or Commissioner on or before 7th Day of next month following the month in which declaration is furnished to him.
  5. PAN is mandatory for making declaration using Form 15G/15H w.e.f 01/04/2010.
  6. Such Form should be furnished at the beginning of each financial year at each branch of bank separately where the assessee holds deposits. If you hold deposits in more than one branch, applicable form needs to be given separately for respective deposits to each concerned branch.
  7. Irrespective of fact that forms 15G / 15H has been filed or not, such income has to be reported under appropriate head while filing of return.

Find out whether you are eligible to Furnish such declaration in Form 15G / 15H?

Before you rush to submit the Form 15G or 15H, make sure that you are eligible. An individual or HUF must satisfy two conditions.

  1. The Estimated Taxable Income for the financial year should be less than the basic exemption limit. This is Rs 2 lakh for individuals below 60 years and HUFs, Rs 2.5 lakh for senior citizens.
  2. This condition is applicable only to Form 15G. The Total Interest Income from all sources should not exceed the basic exemption limit. Senior citizens have been exempted from this condition because most retirees get the biggest chunk of their income from interest.
  • These conditions are not new. The only difference is that now the individual has to specifically mention his expected income in the form. In the table below, we look at the various situations in which an individual is eligible to file the declaration.
  • Interestingly, these forms also require the individual to mention details of other incomes, including dividends from shares and mutual funds. Dividend income is tax-free but the Income Tax Department still wants to know how much you earned from them. The new forms seem to have been made with all the possible situations in mind which may follow in future.

When can you submit 15H or 15G

Consequences in case of False or Erroneous Declaration

Prosecution

This Article is intended to make people aware on the consequences of declaring wrong details or furnishing these declaration though not entitled to do so as per the Act. Assessee shall be penalized under section 277 of the Act along with rigorous imprisonment irrespective of fact that such wrong details were furnished intentionally or unintentionally as “Ignorance of Law no excuse.”

EVASION OF TAX Penalty
Exceeds Rs.25,00,000 Rigorous Imprisonment not less that 6 Months which may extend upto 7 Years and fine;
Other Cases Rigorous Imprisonment not less that 3 Months which may extend upto 2 Years and fine;

It is advised to declare non deduction of TDS in such form only in case a person is in no doubt that his/her income shall not exceed the taxable limit. Such declaration should be avoided even in case; there is minuscule doubt in order to avoid seeing yourself “Behind the Bars.”

Contributed by:
Rishit Korodia Web
Rishit Koradia, Tax Solutions Executive, KCJM

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