THE government has simplified the format and procedure for self-declaration in Form 15G or 15H. Investors in bank fixed deposits, recurring deposits and other investments seeking non-deduction of tax at source can submit the form electronically. At present, such forms are submitted only in paper form and in triplicate.
After receiving the form, the bank or any financial institution will not deduct tax and will instead allot a Unique Identification Number (UIN) to the investor. The particulars of self-declaration will have to be furnished by the deductor along with UIN in the quarterly TDS statements. This will reduce the cost of compliance and will be convenient for both the taxpayer and the deductor. The revised procedure has become effective from October 1. The deductor will, however, be required to retain Form 15G and 15H for seven years.
An individual, 60 years or above, would need to submit Form 15H. Resident individuals below 60 years, HUFs and trusts will have to file Form 15G. Non-resident individuals or companies cannot file these forms. This limit is applicable for each branch of a bank and not for all its branches taken together. All banks deduct TDS if the interest from fixed or recurring deposits exceeds R10,000 in a financial year. Any false declaration in Form 15G or 15H will attract penalty under Section 277 of the Income-Tax Act. On conviction, if the tax sought to be evaded is more than R25 lakh, the punishment will be rigorous imprisonment for six months and could even be extended to seven years with fine.
Till now, if one had deposits in various banks or in various branches of the same bank, he had to submit these forms at every branch. But from now, he will get the UIN, which will have to be furnished at the time of filing the quarterly statements. If tax on the interest paid is not deducted by the bank, the investor can pay the tax at a marginal rate at the time of filing returns.
Banks deduct 10% TDS on the interest paid on fixed deposits. If the individual does not provide the PAN, the bank will deduct TDS on the interest at 20%. While submitting the forms, the individual investor must ensure that he gives correct PAN. Investors are needed to give details of various investments, code of the income-tax assessment office, complete address, email, phone number and occupation. Investors will have to mention details of other incomes like dividends from shares and mutual funds, amount of money withdrawn from National Savings Scheme.
Banks do not deduct any TDS on interest on deposits in a savings account if the interest paid is below R10,000 in a year. If the investor finds the bank has deducted TDS for fixed or recurring deposits despite submitting the forms 15G/15H, he will have to file income-tax returns after the end of the financial year to claim refund.