Form 15G / Form 15H- File details correctly in TDS return

Centralized Processing Cell (TDS)  has observed from its records that Flag “B” is not being raised form 15G/ Form 15H Forms in quarterly TDS Statements filed.

The prevalent practice is to raise the flag only in the TDS Statements filed in the last quarter of the Financial Year, however, such transactions must be reported within the relevant quarter. Please note that the obligation to report each transaction in the relevant quarter, where tax has not been deducted on the basis of Form 15G/ Form 15H , falls on the deductor and non-compliance amounts to incorrect verification of completeness of TDS statement.

Your attention is, therefore, invited to the following:

What is Form 15G/ Form 15H and its relevance:

Under section 197A of the Income Tax Act 1961, Form 15G/ Form 15H is a self-declaration, which is provided by a person resident in India (not being a Company or Firm) to their deductor that the tax on his estimated total income of the previous year, in which such income is to be included in computing his total income, will be NIL. The Declaration in writing should be collected by the deductor in Duplicate. It is also to be noted that TDS deductible if Form 15G/ 15H are collected after 31st March.

The Declaration can be made in the following Forms:

a. Form 15H – For Senior Citizens

b. Form 15G – For other than Senior Citizens

Such declaration under section 197A can be made only for tax deductions under section 192A, 193, 194, 194A, 194D, 194DA, 194I, 194EE. Form 15H/15G to Avoid TDS deduction

 How to show Form 15G/ Form 15H details in TDS statements:

If the deductee provides Form 15G/ Form 15H to their deductor, then deductor is not liable to deduct tax at the time of payment/ credits and needs to raise Flag “B” in the column “Reason for non-deduction/ lower deduction” while preparing the TDS Statement using version 3.8 of the Return Preparation Utility (RPU). (Column 326 in case of Form 24Q and 424 in case of Form 26Q).

The person responsible for paying any income of the nature shall deliver or cause to be delivered to the Chief Commissioner or Commissioner, a copy of the declaration, on or before the seventh day of the month next following the month in which the declaration is furnished to him.

Consequences, if deductor does not raise Flag “B”:

If the deductor does not raise Flag “B” in case of non-deduction, the rate of tax as per the relevant section under the Act will become applicable and a Short Deduction default will be raised. Your attention is invited to provisions of section 201 of the Act, which reads as follows:

Where any person who is required to deduct any sum, does not deduct or does not Pay or after deduction, fails to pay, the whole or any part of the tax, then such person shall be deemed to be an assessee in default in respect of such tax and liable to pay simple interest.

Such person shall be required to pay interest on account of Short deduction and Late deduction at the rate of 1% and 1.5% respectively of the tax amount.

(Republished With Amendments)