Budget 2015-16 – Enabling of filing self-declaration in Form No.15G/15H for non-deduction of tax at source onpayment made under life insurance policy
The Finance (No.2) Act, 2014, inserted section 194DA in the Act with effect from 1.10.2014 to provide for deduction of tax at source at the rate of 2% from payments made under life insurance policy, which are chargeable to tax. It has been further provided that no deduction shall be made if the aggregate amount of payment during a financial year is less than Rs. 1,00,000. In spite of providing high threshold for deduction of tax under this section, there may be cases where the tax payable on recipient’s total income, including the payment made under life insurance, will be nil. The existing provisions of section 197A of the Act inter alia provide that tax shall not be deducted, if the recipient of the certain payment on which tax is deductible furnishes to the payer a self-declaration in prescribed Form No.15G/1 5H declaring that the tax on his estimated total income of the relevant previous year would be nil. It is, therefore, proposed to amend the provisions of section 197A for making the recipients of payments referred to in section 194DA also eligible for filing self-declaration in Form No.15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A.
This amendment will take effect from 1st June, 2015.
NOTE ON RELEVANT CLAUSES OF FINANCE BILL 2015
Clause 49 of the Bill seeks to amend section 197A of the Income-tax Act relating to no deduction to be made in certain cases.Online GST Certification Course by TaxGuru & MSME- Click here to Join
The existing provisions contained in sub-sections (1A) and (1C) of the aforesaid section provide that no deduction of tax shall be made under the sections referred to in the said sub-sections in the case of a person specified therein, if such person furnishesto the persons responsible for paying any income of the nature referred to in specified sections, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect 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.
It is proposed to amend the sub-section (1A) and sub-section (1C) of the said section so as to give the reference of section 192A and section 194DA also in the said sub-sections.
These amendments will take effect from 1st June, 2015.
EXTRACT OF RELEVANT CLAUSES FROM FINANCE BILL 2015
49. Amendment of section 197A.
In section 197A of the Income-tax Act, with effect from the 1st day of June, 2015,—
(i) in sub-section (1A), for the words, figures and letter “section 193 or section 194A” at both the places where they occur, the words, figures and letters “section 192A or section 193 or section 194A or section 194DA” shall respectively be substituted;
(ii) in sub-section (1C), for the words, figures and letter “section 193 or section 194 or section 194A” at both the places where they occur, the words, figures and letters “section 192A or section 193 or section 194 or section 194A or section 194DA” shall respectively be substituted.
( Compiled by Taxguru Team)