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Changes in income tax Form 15H


CBDT has modified the Form 15H. The changes in Form 15H shall bring big relief to the senior citizen persons furnishing Form 15H to save TDS on income more particularly, saving TDS on interest income from fixed deposits, etc. from a bank.

Read more on Form 15G and Form 15H and How to fill Form 15H here

CBDT has issued a Notification No. 41/2019 dated 22nd May 2019 and amended the rules applicable for furnishing or filing of the Form 15H.

There is no changes or modification in the form level structure but a clarificatory provision was inserted in the Notes to the new Form 15H. This clarification was inserted by way of a 'proviso' in the Note 10 of the old Form 15H which finds a place after the Part-II of the Form 15H.

Note 10 reads as follows-

"10 The person responsible for paying the income referred to in column 15 of Part I shall not accept the declaration where the amount of income of the nature referred to in section 

197A(1C) or the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to tax after allowing for deduction(s) under Chapter VI-A, if any, or set off of loss, if any, under the head "income from house property" for which the declarant is eligible. For deciding the eligibility, he is required to verify income or the aggregate amount of incomes, as the case may be, reported by the declarant in columns 15 and 17."

Now after the above Note 10, a proviso is inserted in the new Form 15H to incorporate the rebate allowable u/s 87A which is as follows-

“Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A.”

It may be noted that Form 15H is applicable to resident individuals who are senior citizens aged above 60 years.

The new rule so notified by the CBDT takes into account the rebate u/s 87A in computing the tax liability of the individual. As we know, the basic exemption limit for a senior citizen individual for AY 2020-21 is Rs. 3,00,000, the new rule requires that declaration in Form 15H can be accepted from an individual, who is a senior citizen if the total income exceeds the basic exemption limit but does not exceed Rs. 5,00,000 and thus eligible for rebate u/s 87A. It may be noted that the Interim Budget 2019 has allowed a full tax rebate of Rs. 12,500 if the total income in FY 2019-20 does not exceed Rs. 5,00,000.

Read more: No tax on Income up to Rs. 5Lakh as per Interim Budget 2019

The filing of declaration in Form 15H for non-deduction of income tax or TDS from income is contained in section 197A(1C) of the Income Tax Act, 1961. As per the provision, a declaration in Form 15H can be filed by a resident Individual who is a senior citizen when tax on his estimated total income of the previous year in which such income, for which declaration in Form 15H is filed, is includible is NIL and for the following nature of income only-

Nature of Income
Section under which tax is deductible
Section 194
Deposits under National Savings Scheme
Section 194EE
Payment from Employees' Provident Funds
Section 192
Interest on securities
Section 193
Interest other than interest on securities
Section 194A
Insurance Commission
Section 194D
Life Insurance Policy maturity proceeds
Section 194DA
Section 194I

Therefore, the legal provision was very clear that Form 15H can be filed if the tax on the estimated total income of the senior citizen individual is Nil which is required to be computed after taking into consideration the rebate u/s 87A.

The new rule incorporated in Form 15H only endorses the legal provision and thus provides clarity to the person accepting the form who otherwise is not Form 15H well conversant with the Income Tax Act. The changes in Form 15H states that a person would accept Form 15H from a senior citizen assessee whose tax liability is 'nil' after considering rebate available under Section 87A of the Income Tax Act, 1961. In the pre-amended or old Form 15H, though there was the provision of rebate in the law, did not contain the fact to take into consideration the rebate in determining the tax liability which was resulting undue hardships on the senior citizens.


Also read:

A senior citizen enjoys higher basic exemption limit of Rs. 3,00,000 compared to a person who is not a senior citizen where the basic exemption limit is Rs. 2,50,000 only. The clarification so scripted on the form itself will clear any ambiguity and thus any dispute between the person furnishing the declaration in new Form 15H and the person accepting the declaration in new Form 15H.

Furthermore, a senior citizen can furnish a declaration in Form 15H even if his or her total income for which declaration is filed exceeds the basic exemption limit or Rs. 3,00,000. In other words, suppose a senior citizen is furnishing a declaration in Form 15H to a bank for non-deduction of income tax or TDS  on interest income on the fixed deposits. He can furnish the Form 15H even if the interest income exceeds Rs. 3,00,000. A non-senior cannot file a declaration in Form 15G under similar circumstances.

It may be noted that the condition for filing of Form 15H is that the tax payable on estimated total income shall be 'Nil'. The total income is derived after deducting the allowable deduction under section 80C, under section 80D, etc. - p[opularly known as Deduction under Chapter VI-A.

The new rule will help senior citizens in avoiding TDS thus will not impact their cash flows and also got relief from taking the refund after the filing of income-tax return.

According to section 87A, "an assessee, being an individual resident in India, whose total income does not exceed Rs. 5,00,000, shall be entitled to a deduction, from the amount of income-tax on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of Rs. 12,500, whichever is less."

The benefit of Section 87 A is available to assessees who are resident individuals with a total income below Rs 5 lakh after deductions under chapter VIA. The maximum rebate allowed is Rs 12,500, for the financial year 2019-20 or assessment year 2020-21.

Though Form 15H can be filed for any of the nature of income mentioned in the Table-1, it is widely used for saving TDS on Interest income on deposits with a bank or a financial institution.

TDS on interest is done under section 194A of the Income Tax Act, 1961. The threshold limit as given in section 194A for interest income in case of a senior citizen is reproduced below-

Rs. 50,000 in case the interest is paid by a bank (This limit is Rs. 40,000 for a non-senior citizen);
Rs. 5,000 in case the interest is paid by a financial institution.

Moreover, the interest on Fixed Deposits and Recurring Deposits are only subject to TDS u/s 194A.

If the interest income in a financial or previous year does not exceed Rs. 50,000 ( or Rs. 5,000, as the case may be) then there is no need to file a declaration in New Form 15H. It is only when the expected interest payment on Fixed Deposits and/or Recurring deposits exceeds Rs. 50,000 ( or Rs. 5,000)  but there is no tax payable on total income by a senior citizen in a financial or previous year,  a declaration in new Form 15H is required to be filed to the bank or financial institution.

It should be noted that filing a declaration in new Form 15H does not mean the income become tax-free. By filing a declaration in new Form 15H, one can save TDS on the interest payment but does not make the interest income tax free. It should be kept in mind that one has to include such interest income in computing his or her total income for the relevant financial year.

The penalty for filing a wrong declaration in Form 15H is severe and may lead to prosecution proceedings if caught. Now-a-days one should be very careful in filing a declaration in Form 15H due to the fact that the deductor (the persons to whom Form 15H is filed) is required to submit online all the received declarations in Form 15G and Form 15H to the income tax authority. On the income-tax database, all the declaration filed by a person in Form 15G or Form 15H will be aggregated on the basis of PAN.

It is further made mandatory that no declaration in Form 15H can be filed without a valid PAN of the declarant.

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