Reply by - ramesh bhatia , Mar 23 2018 4:45PM
Form
15 g / h
[As
amended by Finance Act 2017]
Section 194A (3) (ix) of the Income Tax
Act 1961 provides for deduction of tax at source only if the interest income of
the claimant paid or credited during the financial year on compensation granted
by Motor Accident Claims Tribunal exceeds Rs.50000/-.
No deduction of tax
shall be made under this section in the case of an individual who is resident
in India if such individual furnishes to the payer a declaration in writing
in Form 15G/15H as the case may be to the effect that his income is below
exemption limit.
The
provisions in this regard are as follows:
Declaration (in duplicate) is to be made in Form No. 15H when the
recipient is aØ
senior citizen and in Form No. 15G when the recipient is other than senior
citizen. Declaration in Form No. 15G/15H
can be made only by an individual resident inØ India. Declaration in Form No. 15G/15H can be made
if the annual interest does notØ exceed the exemption limit (i.e.
Rs.250000 or Rs. 300000 or Rs. 500000 as the case may be). However this
condition is not applicable in case of a senior citizen (i.e. resident
individual of at least 60 years of age) i.e. a resident senior citizen can
furnish declaration in form 15H even if annual interest likely to be paid to
him exceeds the exemption limit of Rs. 250000 or Rs. 500000 as the case
may be provided the tax payable on his total income is nil. The tax payable on total income of the year
should be “Nil”.Ø The payer who receives such a
declaration in Form No. 15G/15H has to deliver one copy of such declaration to
the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner within 7 days of the month next following the
month in which such declaration is received by him.
Mr.
Kumar proprietor of Kumar & Co has taken a loan from Mr. Raja (resident
and aged 70). Total amount of interest for the year amounts to Rs. 365000..
Mr. Raja intimated to Mr. Kumar that apart from interest income he had no other
income and he has invested Rs. 70000 in PPF entitled for deduction under
section 80C. As his total income is below exemption limit he furnishes Form
No. 15H to Mr. Kumar for non deduction of tax at source. Mr. Kumar argued that
he could not accept Form No. 15H since the amount of interest to be paid
during the year would exceed the basic exemption limit. Is the contention of
Mr. Kumar correct? ** As per section 197A the person paying the interest other
than interest on securities to an individual is not required to deduct tax from
the interest if such individual issues a declaration in Form No. 15G. Form No.
15G can be accepted only if the amount of interest for the year does not exceed
the exemption limit. It should be noted that if the person receiving the
interest is a resident senior citizen then the declaration is to be given in
Form No. 15H and not in Form no. 15G. Form No. 15H can be given by the resident
senior citizen even if the amount of interest exceeds the exemption limit
provided tax on his total income is nil. Mr. Raja is a senior citizen and his
total income is below exemption limit therefore he can furnish a declaration
in Form No. 15H even though interest exceeds the basic exemption limit and Mr.
Kumar has to accept the declaration. Hence the argument of Mr. Kumar is not
correct. Suppose in the given case if the age of Mr. Raja is 56 years (i.e.
below 60 years) then he is not a senior citizen and in that case the discussed
benefit will not apply. In other words if the age of Mr. Raja is 56 years then
he cannot issue Form 15G because the amount of annual interest exceeds the
basic exemption limit.