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Revised Procedure for non-dedcution of TDS against Form 15G / Form 15H

May 23rd, 2016 — direct tax, return

This is most relevant for entities which have borrowed monies from individuals who are not chargeable to tax. An example would be a loan to a private company by the individuals non-working parents or spouse.

Payee can now submit their self-declaration (Form 15G / Form 15H) either in paper form or electronically to the Payer / Deductor.

The Payer / Deductor will, based on this submission, not deduct tax at source (withholding tax) and is now required to allot a Unique Identification Number (UIN) to each self-declaration (Form 15G / Form 15H) received in a given financial year.The Payor / Dedector has to allot the UIN based on 3 fields –

  • 1st Field – Sequence Number: A 10 character alphanumeric (1 letter and 9 digits) sequence starting with “G” for Form 15G and “H” for Form 15H. The sequence number should restart at 1 for each financial year.
  1. Sequence number for 1st Form 15G should be – G000000001
  2. Sequence number for 1st Form 15H should be – H000000001
  • 2nd Field – Financial Year: This represents the financial year for which the Form 15G / Form 15H is submitted as follows 201516 (for financial year 2015-16) or 201617 (for FY 2016-17)
  • 3rd Field – The TAN of the Payer/ Deductor: i.e. the PAN person / entity responsible for deducting TDS (or not deducting TDS in this case).

Combining these three fields gives the UIN for the Form 15G / Form 15H declaration.

  1. UIN for 1st Form 15G of FY 2016-17 should be G000000001201617ABCD12345Z
  2. UIN for 1st Form 15H of FY 2016-17 should be H000000001201617ABCD12345Z

Points to Note:

  1. The payer/ deductor is required to upload all the declarations (paper and electronic) to the Income Tax Department website on a quarterly basis
  2. The payer / deductor is required to furnish the Form 15G / Form 15H declaration in their Quarterly TDS Return, even if no tax has been deducted for the quarter
  3. The PAN of the payee has to be mandatorily quoted
  4. If the payer has not reported the UIN in their Quarterly TDS Return or not uploaded the UIN to the Income Tax website, they have to file an exceptional report
  5. The payer / deductor is required to retain Form No.15G / Form 15H for seven years.

The last date for uploading the Form 15G / Form 15H for 2015-16 is 31st May 2016.

For Quarter 1 of 2016-17 (April to June 2016) the last date for uploading the Form 15G / Form 15H is 31 July 2016.

Full text of the notification is available here.

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