Tuesday 27 October 2015

Changes in Form No.15G and 15H and procedures wef 01.10.2015


Tax payers seeking non-deduction of tax from certain incomes are required to file a self declaration in Form No. 15G or Form No.15H as per the provisions of Section 197A of the Income-tax Act, 1961 In order to reduce the cost of compliance and ease the compliance burden for both, the tax payer and the tax deductor, the Central Board of Direct Taxes (CBDT) has simplified the format for self declaration in Form No.15G or 15H. The procedure for submission of the Forms by the deductor has also been simplified in the Income-tax Rules, 1962 by substituting newly constructed rule 29C.

Under the simplified procedure, a payee can submit the self-declaration either in paper form or electronically. The deductor will not deduct tax and will allot a Unique Identification Number (UIN) to all self-declarations in accordance with a well laid down procedure to be specified separately. The particulars of self-declarations will have to be furnished by the deductor along with UIN in the Quarterly TDS statements. The requirement of submitting physical copy of Form 15G and 15H by the deductor to the income-tax authorities has been dispensed with. The deductor will, however be required to retain Form No.15G and 15H for seven years. These changes will come into force on the 1st day of October, 2015 as per the Notification issued vide S.O. No.2663 (E) dated 29th September 2015. This is a welcome decision for honest tax payers but a cautioning alarm for habitual violators. It is felt that it is more revenue oriented and is more beneficial for the income tax department than that of the tax payers

Advantages and features:

1. Proper adherence:

The deductor has to check whether person providing the form is eligible to submit requisite form or not and that too according to particulars submitted by the person. Thus there is more responsibility on the deductor now than was in the past, who now has to ensure that the person submitting these forms is in-fact eligible to submit either form 15G or 15H. The eligibility will be measured on two counts. One pertains to the age of the deductee and the other pertains to the non taxable portion of income. The decutor can ensure former on the basis of DOB on PAN card or Adhar card or KYC documents available with them whereas latter condition of Income can be verified on the basis of the estimate of the customer. The banker can not ordinarily dispute income of the customer and has to accept it as it is. However, if the income received by the customer is known to the bankers being paid by them, then they can not escape from the liabilities if they accept the incorrect figures in form and latter on taxpayer defaults.

2. Proper information:

The deductor has to ensure that the person submitting the form has stated correct PAN in the form 1 5G or 1 5H and the same is properly verified by the deductor and the PAN is saved in its record for future reference. If the form contains defective or no mention of PAN, then tax will have to be deducted at 20%. This will ensure discipline in compliance as both deductor and deductee will be under an obligation to provide correct details to the income tax department. The bankers in the past were considering this ‘process’ as a ritual without any responsibility and now in future they will be under scanner of the department for receiving these forms for incomplete/defective details

3. Physical as well as electronic submission:

Eligible deductee may now file form 15G/15H in paper form physically or submit the said form electronically after deductor like banks and others make necessary arrangements to provide such facility on their online websites. These customers may submit Form 15G /Form 15H by using the website of the banks. On receipt of this form, the deductor will not deduct tax and will allot a Unique Identification Number (UIN) to all self-declarations. It is to be noted that UIN should be separate for each type of form and quarter.

4. Electronic compliances with less paper work:

The particulars of self-declarations made by the customers either through form 15G or 15H will have to be furnished by the deductor along with UIN in the Quarterly TDS statements of the deductor. The forms received in a particular quarter are required to be reported in quarterly etds return even if there is no deduction in that quarter. The requirement of submitting physical copy of Form 15G and 15H by the deductor to the income-tax authorities has been dispensed with. The department then will specify this information in 26AS of the concerned customer for verification and knowledge of the assessing officer. Deductor is required to retain the form 15G/15H for seven years.

5. Only resident can file

Form No 15G or 15H can be filed only by residents. NRI can not fie this form. In form 15G /15H person has to provide details of Income for which form 15G/15H has been submitted.

6. Why, who and when this form needs to be submitted

Getting a tax refund can be cumbersome for few as delays by the Income Tax Department are common. It makes sense to plan your taxes at the beginning of the year, to avoid over payment and the refund process. Submitting investment declaration with your employer on time and filling form 15G/15H will save your half the hassles. However, you cannot randomly submit forms 15G and 15H. There are certain precautions one should take while submitting these forms. Filing a wrong form without being eligible to do so would be illegal and could involve payment of interest on the tax payable and also attracts penal consequences. If your interest income exceeds 10,000 a year, the bank will deduct 10% tax at source. If you do not furnish PAN details, the TDS rate will be higher at 20%. However, you can submit a Form 15G and 15H to avoid TDS on interest income subject to satisfaction of conditions.

a) Who can submit form No. 15G?

A person (Individual, HUF) who is resident in India can submit form No. 15G. NRI cannot submit this form. The Person below sixty years needs to fulfill the following two conditions to become eligible to submit Form 15G,:

i) The estimated total income computed as per the provisions of the Income Tax Act is less than or equal to basic exemption limit i.e. Rs. 2,50;000 for the AY 201 5-16 and onwards and

ii ) The aggregate amount of interest income etc. received during the financial year should not exceed the basic exemption limit i.e Rs 2,50,000 for the AY 2015-16 and onwards.

If both these conditions are satisfied, Form 15G may be submitted to the deductor and entire interest income could be received without any deduction of tax at source.

b) Who can submit form No. 15H?

Any resident individual, who is of the age of sixty years or above can submit form No. 15H provided his estimated income is less than or equal to basic exemption limit i.e Rs. 3,00,000 for the AY 201 5-16 onwards. This form can be submitted only by the senior citizen even though the total interest amount from the payer may exceed Rs. 3,00,000 (i.e., the limit of basic exemption limit).

The following table will explain the concept of eligibility to furnish Form 15G and 15H-

c) Penalty for incorrect/wrong submission of Form 15G or 15F

Imprisonment and fines await those who wrongly file the two forms to avoid tax on interest income liable for tax deduction at source.

• False statement in verification or delivery of false account, etc.


Section 277 provides for prosecution for making false statement or producing false accounts /documents. If a taxpayer makes statement in any verification under the Act or under any rules made thereunder, or delivers an account or statement which is false, and [As amended by Finance Act, 2015] which he either knows or believes to be false, or does not believe it to be true, he shall be punishable as follows:

i)With rigorous imprisonment which shall not be less than 6 months but which may extend to seven years and with fine where tax sought to be evaded exceeds Rs. 25 lakh (Rs. 1 lakh upto 30-6-2012).

ii) With rigorous imprisonment which shall not be less than 3 months but which may extend to two years (3 years upto 30-6-2012) and with fine in other cases.
Failure to comply with provisions of relating to Permanent Account Number (PAN)

Section 272B provides penalty in case of default by the taxpayer in complying with the provisions of section 139A or knowingly quoting incorrect PAN in any document referred to in section 139A(5)(c) or intimates incorrect PAN for the purpose of section 1 39A(5A)/(5C). Penalty under section 272B is Rs. 10,000.

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