Summary : In specific cases under the Income Tax Act, tax is not required to be deducted at source if the payer is a specified institution or if the recipient submits a self-declaration in Form 15G or Form 15H, declaring that their total estimated income is below the taxable limit. Form 15G is applicable to resident individuals other than senior citizens, while Form 15H is meant for resident senior citizens aged 60 years or above. These declarations serve as an undertaking that the individual’s estimated tax liability for the financial year is nil, thereby making TDS unnecessary.
Resident individuals can file a declaration under Section 194 for dividends and Section 194EE for National Savings Scheme income if their total income is below the basic exemption limit and tax liability is nil. Similarly, non-corporate taxpayers (excluding firms and companies) can file such declarations for incomes covered under Sections 192A (accumulated balance due to an employee), 193 (interest on securities), 194A (interest other than on securities), 194D (insurance commission), 194DA (life insurance policy payments), 194-I (rent), and 194K (income in respect of units). Resident senior citizens can also file declarations under these provisions, including Section 194 (dividend) and Section 194EE (National Savings Scheme), provided their estimated total income after rebate under Section 87A results in no tax liability.
Declarations in Form 15G or Form 15H can be submitted either in paper form or electronically, verified appropriately, to the payer in duplicate. Once the declaration and PAN are furnished, no tax will be deducted at source. The payer is then obligated to allot a Unique Identification Number (UIN) to each declaration, digitize any paper submissions, and upload them quarterly to the income tax e-filing portal under digital signature. The UIN includes three fields—sequence number (G for Form 15G and H for Form 15H), the relevant financial year, and the TAN of the payer. The uploading timelines are within 15 days of the end of the first three quarters and within 30 days of the end of the fourth quarter. Additionally, the payer must include details of such transactions in the quarterly TDS statement, quoting the UIN even when no tax is deducted.
For compliance and audit purposes, the payer must preserve each Form 15G or 15H declaration for seven years from the end of the financial year in which it was received. This retention enables the Income-tax Department to verify the correctness of declarations during assessment or investigation. Failure to maintain or upload such declarations correctly can result in discrepancies and compliance risks for the payer.
In essence, filing Form 15G or 15H provides eligible individuals and senior citizens a legitimate means to prevent unnecessary TDS deductions when their total income is below the taxable threshold. At the same time, it imposes reporting and recordkeeping responsibilities on payers to ensure transparency and compliance with TDS provisions.
No deduction of tax in certain cases
Introduction
In certain cases, tax may not be required to be deducted from payments if either payer is a specified institute or the recipient files a self-declaration in Form 15H (if the recipient is a senior citizen) or Form 15G (for other individuals) for no deduction of tax.
When declaration can be filed?
A self-declaration for non-deduction of tax can be filed by eligible individuals in Form 15G or Form 15H for eligible income. The declaration must be filed again if the estimated income of the payee changes.
In case of Resident non-senior citizen
A resident individual can file a declaration for non-deduction of tax under Section 194 for ‘Dividend’ and under Section 194EE for ‘National Saving Scheme’, if his income (in respect of which he is eligible to file a declaration) does not exceed the maximum exemption limit and tax on his estimated total income for the financial year is nil.
In case of Non-corporate taxpayers
Non-corporate taxpayers (other than a company or a firm) can file a declaration for non-deduction of tax under the following provisions if their income (in respect of which it is eligible to file a declaration) does not exceed the maximum exemption limit and tax on their estimated total income for the financial year is nil:
- Section 192A: TDS from payment of the accumulated balance due to an employee
- Section 193: TDS from Interest on Securities
- Section 194A: TDS from Interest other than Interest on Securities
- Section 194D: TDS from Insurance Commission
- Section 194DA: TDS from payment in respect of life insurance policy
- Section 194-I: TDS from Rent
- Section 194K: TDS from income in respect of units (Resident)
In case of Resident senior citizens
Resident senior citizen (whose age is 60 years or above) can file a declaration for non-deduction of tax under the following provisions if the tax on his estimated total income is nil for the financial year after considering the rebate under section 87A:
- Section 192A: TDS from payment of accumulated balance due to an employee
- Section 193: TDS from Interest on Securities
- Section 194: TDS from Dividend
- Section 194A: TDS from Interest other than Interest on Securities
- Section 194D: TDS from Insurance Commission
- Section 194DA: TDS from payment in respect of life insurance policy
- Section 194EE: TDS from payment in respect of deposits under National Saving Scheme
How to submit the declaration?
The declaration can be submitted in writing to the payer in duplicate in Form 15H for senior citizens and Form 15G for other persons. The declaration can be submitted in paper format or electronically after verification. Once the declaration and PAN are provided to the payer, the tax will not be deducted at the source.
Intimation to Department
The payer of income is required to allot a Unique Identification Number (UIN) to all declarations (paper/electronic) filed by the payee. The payer of income is also required to digitize all paper declarations. The UIN consists of three fields, which are as follows:
a) Sequence number: This is a 10 Alphanumeric Number which starts with an alphabet followed by 9 digits. In the case of Form 15G, the alphabet shall be ‘G’ and in the case of Form 15H, it shall be ‘H’. For example, G000000001 or H000000001.
b) Financial year for which declaration is being furnished
c) TAN of the payer.
The electronic and digitized declarations shall be uploaded by the payer on a quarterly basis on the e-filing site (https://www.incometax.gov.in/iec/foportal/) under his digital signature within:
a) 15 days from the end of the first, second, and third quarter
b) 30 days from the end of the fourth quarter.
Apart from uploading declarations in Form No.15G/15H, the payer shall have to include the details of transactions, in respect of which Form 15G/15H has been received, in the quarterly TDS Statement even if no tax is deducted during the quarter. The payer shall quote ‘Sequence Number’ (Field ‘a’ of UIN) in the quarterly TDS statement against the transaction covered under Form No. 15G/15H declaration.
The payer will be responsible for reconciliation of the allotted UINs vis-a-vis reported UINs to the Income-tax department through reporting in quarterly TDS statements as well as through uploading of declarations on a quarterly basis.
Retention of Declaration for 7 Years
An income-tax authority may require the person responsible for payment to make available the declaration for the purposes of verification or any proceeding under the Act before the end of 7 years from the end of the financial year in which the declaration in Form No. 15G/15H has been received. This means that the person responsible for payment must keep the declaration for 7 years from the end of the financial year in which the declaration was received.
MCQs on No deduction of tax in certain cases
Q1. Tax may not be required to be deducted from payments if the recipient files a self- declaration in_______for no deduction of tax.
(a) Form 15H (if the recipient is a senior citizen)
(b) Form 15G (for other individuals)
(c) Either (a) or (b)
(d) None of the above
Correct Answer: (c)
Justification of correct answer: Tax may not be required to be deducted from payments if either payer is a specified institute or the recipient files a self-declaration in Form 15H (if the recipient is a senior citizen) or Form 15G (for other individuals) for no deduction of tax.
Q2. A resident individual can file a declaration in Form 15G/15H if_______.
(a) The income does not exceed the maximum exemption limit
(b) Tax on the estimated total income for the financial year is nil
(c) Both (a) and (b)
(d) None of the above
Correct Answer: (c)
Justification of correct answer: A resident individual can file a declaration for non-deduction of tax under Section 194 for ‘Dividend’ and under Section 194EE for ‘National Saving Scheme’, if his income (in respect of which he is eligible to file a declaration) does not exceed the maximum exemption limit and tax on his estimated total income for the financial year is nil.
Q3. Non-corporate taxpayers (other than a company or a firm) cannot file a declaration for non-deduction of tax for incomes liable to tax deduction under____________.
(a) Section 192A
(b) Section 193
(c) Section 194A
(d) Section 194J
Correct Answer: (d)
Justification of correct answer: Non-corporate taxpayers (other than a company or a firm) can file a declaration for non-deduction of tax under Sections 192A, 193, and 194A, if their income (in respect of which it is eligible to file a declaration) does not exceed the maximum exemption limit and tax on their estimated total income for the financial year is nil.
Q4. Unique Identification Number (UIN) consists of the following ____.
(a) Sequence Number
(b) Financial year for which declaration is being furnished
(c) TAN of the payer
(d) All of the above
Correct Answer: (d)
Justification of correct answer: The payer of income is required to allot a Unique Identification Number (UIN) to all declarations (paper/electronic) filed by the payee. The payer of income is also required to digitize all paper declarations. The UIN consists of three fields, which are as follows:
a) Sequence number: This is a 10 Alphanumeric Number which starts with an alphabet followed by 9 digits. In the case of Form 15G, the alphabet shall be ‘G’ and in the case of Form 15H, it shall be ‘H’. For example, G000000001 or H000000001.
b) Financial year for which declaration is being furnished
c) TAN of the payer.
Q5. The electronic and digitized declarations shall be uploaded by the payer on a _______ basis on the e-filing site under his digital signature.
(a) Quarterly
(b) Half-yearly
(c) Yearly
(d) Any of the above
Correct Answer: (a)
Justification of the Correct Answer: The electronic and digitized declarations shall be uploaded by the payer on a quarterly basis on the e-filing site (https://www.incometax.gov.in/iec/foportal/) under his digital signature within:
(a) 15 days from the end of the first, second, and third quarter
(b) 30 days from the end of the fourth quarter.
Q6. The person responsible for payment must keep the declaration for _____ from the end of the financial year in which the declaration was received.
(a) 7 years
(b) 5 years
(c) 8 years
(d) Not required to preserve the declaration
Correct Answer: (a)
Justification of the Correct Answer: An income-tax authority may require the person responsible for payment to make available the declaration for the purposes of verification or any proceeding under the Act before the end of 7 years from the end of the financial year in which the declaration in Form No. 15G/15H has been received. This means that the person responsible for payment must keep the declaration for 7 years from the end of the financial year in which the declaration was received.
