Understanding Form 15G – Non-deduction of TDS



Understanding Form 15G/H – Non-deduction of TDS

We all are very well aware of the concept of tax deduction at source (TDS) prevailing under the Indian income tax, wherein, the tax is deducted at the source of income once the payment exceeds the specified limit.

There can be a circumstance, wherein, the taxpayer is not liable to income tax since the earning of the taxpayer is below the eligible exemption limit, however, the deductor liable to deduct TDS would deduct the TDS, and the taxpayer in-turn would have to claim a refund of the same. To avoid this situation, the Government of India had introduced the concept of non-deduction of TDS by filing specified forms. Form 15G is one such Form.

What is Form 15G/H?
Form 15G is a self-declaration form which can be filed by the eligible persons for applying for non-deduction of tax in case the total income of the eligible person doesn’t exceed the exemption limit of the respective financial year. Form 15H is used for similar self declaration by Senior citizens.

Who are Eligible for filing this form?
Form 15G can be submitted by Individuals, less than 60 years age, or by a Hindu Undivided Family (HUF) or by a trust. Form 15H is for senior citizens above 60 years of age.  However, a company or a firm is ineligible for submitting form 15G/H;

An applicant should be a resident of India;

The total income of the applicant is less than the basic exemption limit of the respective financial year;

The total tax calculated (after all the deductions and exemptions) is NIL of the respective financial year.

What are the Benefits of filing Form 15G?
In case the eligibility criteria, as mentioned above, is satisfied and the self-declaration Form 15G is filed, then the applicant can get following benefits –

·       Non-deduction of TDS on bank interest on fixed deposits and recurring deposit where the bank interest exceeds INR 40,000.
·       Non-deduction of TDS on payments in respect of deposits under post office and deposits under National Savings Scheme, etc.
·     Non-deduction of TDS in case of premature withdrawal of funds from Employees’ Provident Fund (EPF).
·       Non-deduction of TDS in case of income from corporate bonds, where income exceeds INR 5,000.
·       Non-deduction of TDS Rent income, where rental income in a year exceeds INR 2,40,000.

What is the time for submission of Form 15G?
Form 15G for non-deduction of TDS is required to be submitted at the beginning of the financial year. Form 15G once submitted would be effective / valid for a time span of one year. The taxpayer who are willing non-deduction of TDS, and qualify the eligible criteria, in next year is required to re-submit the form for another financial year.

What the consequences of non-submission are of Form 15G are?
The taxpayer who fulfils all the eligible criteria, however, forgets to submit the required form 15G at the beginning of the year, in that case, the taxpayer is left with the following two option –
·    In case the TDS is not yet deducted, or in case the TDS is deducted periodically (i.e. quarterly, monthly or half-yearly), the taxpayer can submit the Form 15G immediately to avoid further deduction of TDS;
·       In case the TDS is already deducted, then, the taxpayer can claim the refund of excess tax paid in the form of TDS by filing income tax return.

What are the other important points to be kept in mind?
·       Form 15G cannot be submitted by the non-resident Indian (NRI).
·       Form 15G needs to be filed separately for separate specified eligible incomes.
·       It is mandatory that the applicant, applying for non-deduction of TDS by filing Form 15G, should have PAN.

What if a false declaration is filed in Form 15G?
In case the applicant provides an incorrect / false declaration in Form 15G, the person would be liable for penalty under section 277 of the Income Tax Act, 1961 as follows:
·       Where the amount of tax, which would have been evaded if the false declaration has been accepted as true exceeds INR 25,000. Imprisonment which shall not be less than 6 months but may extend to 7 years.
·      Any other case Imprisonment which shall not be less than 3 months but may extend to 2 years with fine.

Schedule a Call today with our experts or write to them on info@gjmco.in for help file your Form 15G/H.

Thanks & Best regards,
Knowledge Base team
GJM & Co.
Chartered Accountants
www.gjmco.in
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