Time and again technology has played a major factor in reducing human effort and paper work. Lot of human efforts had been saved when filing Income Tax returns was done online. It was cheered by both the tax payers and tax officials as the process became automated and simple.
On a similar note, there will now be an element of relief for those who have to file their Form 15G and Form 15H for ensuring non deduction of tax at source. Till now the entire process had to be done in a physical form and this caused a lot of time and effort to be spent on completing the requirements. The income tax department has now allowed for this process to be done online and this change will be able to provide some relief for the taxpayers. It does not change the whole taxation structure but will reduce the effort that has to be made on this front.
Here are some additional details related to this which needs the attention of the taxpayers.
The whole process involves the payer deducting a part of the payment and then depositing this with the government against the PAN of the person who has to receive the payment. This is considered as a tax paid by the person who would have received the payment. This ensures that a part of the transaction goes to the government and then this has to be adjusted at the time of the filing of the income tax return and the calculation of the final amount of taxes. An example of this is the interest received on a bank fixed deposit. When the interest earned during a year crosses the Rs 10,000 mark then the bank will deduct tax at source and remit the net amount to the fixed deposit holder.
There are several people who might not have any tax to be paid because the total amount that they earn is less than the amount that is taxable under the Income Tax Act. If there was no option available for these taxpayers which includes a large section of senior citizens then they would have to wait a long time till they can file their tax returns and get a refund.
The option for them is to fill in Form 15G if they are less than 60 years of age and Form 15H if they are more than 60 years of age. This will ensure that the person who has to deduct the tax will not make any deduction at the time of making the payment.
The procedure that had to be followed till now required the filling up of the form and then submitting this to the entity that had to make the deduction. Normally 3 copies of the form had to be filled in and submitted.
- One copy would be returned after acknowledgement,
- One would be sent to the income tax department, and
- One would be kept with the entity making the deduction.
This involved a lot of time and effort and hence was not an easy thing to complete.
The ability of the taxpayer to now submit these forms online means that they have been freed from the requirement of physically filling in the form and the details that are required online would be easier. Also an acknowledgement would be generated with a unique number and this would also make it easier to track in terms of what is the situation after the submission.
Earlier there were a lot of instances wherein even after submission of the forms the deduction was made and it was difficult to know where the problem was. This will now be eliminated and all that the taxpayer has to do is to ensure that they have their basic details in place which they can submit and complete this process quickly.
CBDT has made filing Form 15G and Form 15H lot simpler by putting it online. A tax payer who did not wish to deduct TDS from certain incomes is now required to file a self-declaration under Form 15G or Form 15H and submit it to the person or organization deducting tax, which is now can be done either in paper form or electronically. Earlier the same was to be submitted only in paper form.
In line with simplifying the procedure of filing for form 15G and Form 15H, both the forms have also been modified reducing the compliances
Procedure for new Form 15G and Form 15H
Under New Form 15G and Form 15H filing procedure, tax payer need to submit online and a person or organization deducting tax on receiving the same will assign a Unique Identification Number (UIN) to all self-declarations in accordance with a procedure by CBDT. Both the UIN and self-declarations details will have to be furnished by the a person or organization deducting tax in the quarterly TDS statements. In addition, a person or organization deducting tax will be required to retain Form 15G and 15H for seven years.
Online submission of form 15G and form 15H shall become effective from 1st October, 2015 and the requirement of submitting physical copy of Form 15G and 15H by the a person or organization deducting tax to the income-tax authorities has been dispensed with.
|Category of Tax Payer
||Income Tax Section
|Individual: Senior Citizen
||Sub-section (1C) of section 197A
|Individual: Non-senior Citizen
||Sub-sections (1) and (1A) of section 197A
Online submission of Form 15G and Form 15H
The tax payer can generate and submit Form 15G/Form 15H online provided the banker created a link on their individual banks Internet Banking. Below I have given a screenshot on how you can generate and submit form 15G/form 15H online to SBI.
Detailed description of Form 15H and 15G
Form 15G and Form 15H are forms which can help a person avoid TDS in case one does not have to pay income tax at the end of the year. Form 15H is for senior citizens and form 15G is for others. The conditions under which Form 15G and 15H may be filed are similar yet with a significant difference. Each taxpayer needs to fully understand the specified conditions and ascertain whether he or she is eligible for filing the relevant form. Filing the form without being eligible to do so is illegal and will invite payment of interest on the tax payable and also a penalty.
Form 15H:- Declaration under sub-section (1C) of section 197A of the Income-tax Act, 1961, to be made by an individual who is of the age of sixty years or more claiming certain receipts without deduction of tax.
- Form 15H can be submitted only by Individual above the age of 60 years.
- Estimated tax for the previous assessment year should be nil. That means he did not pay any tax for the previous year because his income is not coming under the taxable limit.
- This form should be submitted to all the person or organization deducting tax to whom you advanced a loan. For example you have deposit Rs.1 lac each in three SBI bank branches than you must submit the Form 15H to each branch.
- Submit this form before the first payment of your interest. It is not mandatory but it will avoid the TDS deduction. In case of the delay, the bank may deduct the TDS and issue TDS certificate at the end of year.
- You need to submit form 15H to banks if interest from one branch of a bank exceeds Rs.10,000/- in a year.
- You need to submit form 15H if interest on loan, advance, debentures, bonds or say Interest income other than interest on bank exceeds Rs.5,000/- in a year.
Form 15G:- Declaration under sub-sections (1) and (1A) of section 197A of the Income-tax Act, 1961, to be made by an individual or a person (not being a company or a firm) claiming certain receipts without deduction of tax of tax.
- Form 15G can be submitted by Individual below the age of 60 years and Hindu Undivided family.
- The above points are applicable to the Form 15G as well, except that the Form 15H is only for the senior citizen.
- Form 15G should be submitted before the first payment of interest on fixed deposit.
Difference between Form 15G and Form 15H
- Form 15G can be submitted by individual below the Age of 60 Years while form 15H can be submitted by senior citizens i.e. individual’s above the age of 60 years.
- Form 15G can be submitted by Hindu undivided families but form 15H can be submitted only by Individual above the age of 60 years.
- The aggregate of the income from interest on securities/interest other than “interest on securities”/units/amounts referred to in clause (a) of sub-section (2) of section 80CCA received during the financial year should not exceed the basic exemption slab for Form 15G while no such condition exists for Form 15H.
To further understand these provisions, let’s take the example of Mr. Sanyam, who is 30 years old. Sanyam’s total income is Rs.3,40,000 for the financial year 2014-15 of which Rs.2,60,000 is earned by way of interest from bank deposits. Sanyam also invests Rs.1,00,000 under Section 80C and pays a medical insurance premium of Rs.15,000. Is Sanyam eligible to furnish Form 15G?
This can be ascertained by finding out if he satisfies both the above conditions.
The first condition is that Sanyam’s final tax liability should be nil. Though Sanyam’s gross income is Rs.3,40,000 lakh, on account of his Section 80C and Section 80D deductions of Rs.1,00,000 and Rs.15,000 respectively, the net income falls to Rs 2,25,000 lakh and consequently he is not liable to pay any tax. Therefore, Sanyam satisfies the first condition.
However, we find that since his interest income of Rs.2,60,000 is more than the basic exemption limit of Rs.2,50,000. Sanyam does not satisfy the second condition and hence he is not eligible to furnish Form 15G to the interest paying organization.
On the other hand Form 15H imposes just the first condition, in that, the final tax on the investor’s estimated total income computed as per the provisions of the Income Tax Act should be nil. The second condition imposed by Form 15G is not applicable in the case of Form 15H.
For example, say Mr. Nenawati, 68 years old, has a total income of Rs.3,50,000 for the financial yeat 2014-15, out of which Rs.95,000 is earned from the senior citizens saving scheme and the rest from bank deposits. He invests Rs.50,000 in PPF. Now, is he eligible to furnish Form 15H?
As pointed out earlier, all Mr. Nenawati has to do is to ascertain his final tax liability. It doesn’t matter what amount he receives from which source; this information is irrelevant for Form 15H. We find that Mr. Nenawati’s net income works out to Rs.3,0,000 (Rs.3,50,000 – Rs.50,000). As the basic exemption limit for Mr. Nenawati is also Rs.3,00,000 (on account of him being a senior citizen), his net tax liability is nil and hence he is indeed eligible to submit Form 15H.
Penalty in filing a wrong form
Any person making a false statement in the declaration shall be liable to prosecution under section 277 of the Income-tax Act, 1961, and on conviction be punishable:
- in case where tax sought to be evaded exceeds one lakh rupees, with rigorous imprisonment which shall not be less than six months but which may extend up to seven years with fine;
- in any other case, with rigorous imprisonment which shall not be less than three months but which may extend up to three years and with fine.
Myths and Facts about Form 15G and Form 15H
|Anybody who wishes to avoid tax deduction can make use of Form 15G/15H
||Only persons with income below taxable limits and Nil Tax liability can only make use of this form.
|Once declaration is given in Form 15G/Form 15H, there is no need to declare this income in return of Income.
||Irrespective of the fact whether the Form is used or not, the respective income should be compulsorily declared in return of income.
|Once declaration is given in Form 15G/Form 15H, there is no need to pay tax on the same.
||As per the provisions, only persons with NIL tax liability only can give these forms. But if there is a tax liability, they have to necessarily pay the requisite tax. On the other hand, by payment of tax they run the risk of giving a wrong declaration. Hence before giving Form 15G/15H, please be doubly careful.
|Form 15G 15H are submitted only to the banks/Financial Institutions/Payer.
||This is partly correct. The person who receives the Form 15G/15H is required to submit one copy of the Form to the Commissioner of Income-tax . Hence the information is passed on the Income-tax department and the Income-tax Department can make further enquiries on the same.
|Submission of Form 15G/15H once is sufficient.
||No. These forms shall be submitted every Financial year at the beginning of the Financial year.
|It is enough that irrespective of the fact that deposits are held in different branches, a single Form is sufficient.
||No. These forms should be submitted to each and every branch where you hold the deposits. For example, if you hold deposits in 3 different branches of State Bank of India, this declaration shall be given for each branch separately.
|Since my Income is below taxable limits and tax is NIL , I do not have to submit the PAN details with the declaration
||No. Every person giving declaration using Form 15G/15H shall compulsorily provide the PAN details along with the declaration irrespective of their Income/Tax status. Otherwise tax will be deducted @ 20% on the Interest.
|Form 15G/15H can be used for not deducting TDS for all types of payments (viz.,) Contract payments, Professional fees, rent etc.
||These forms can be used only for payments in the nature of Interest of Securities, Dividend, and Interest other than Interest on Securities (Bank/Company Deposits), NSS Interest on Units. For other types of payments, these forms cannot be used.
(References : bssridhar.com, PIB & Incometaxindia.gov.in)