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Monthly Archives: February 2012

Declaration for No TDS on Interest under Senior Citizens Savings Scheme – Clarification

The Government has issued followed clarification regarding Senior Citizens Saving Scheme:

  1. An individual resident in Indian of sixty-five years of age or above may furnish a declaration in Form No. 15H to the bank/post office if the tax on his estimated income for the financial year is nil.
  2. A declaration in Form No. 15G can be furnished by a depositor of less than sixty-five years of age if-
  • The tax on his estimated total income for the financial year is nil, and
  • The aggregate amount of interest credited or paid or likely to be credited or paid during the during the financial year is not more than the maximum amount which is not chargeable to tax (Rs. 1, 00, 000 for male taxpayer and Rs. 1, 35, 000 for a woman taxpayer)

Note:Both the above conditions are required to be fulfilled. The information relating to deposits under the Senior Citizen Saving Scheme, 2004 may be given by the depositors inSchedule III of Form No. 15G

  1. On furnishing of a declaration in Form No.15H or Form No. 15G to the bank/post office, no deduction of tax shall be made by the bank/post office.
  2. In suitable cases a certificate for lower dedication or no deduction of tax at source under section 197 (1) may also be obtained by the depositors from their Assessing Officers.

Bank and post offices have been advised that such portion of the tax not deduction by them during 2004-05 and 2005-06, which has been paid directly by the depositors as advancetax or self-assessment tax or otherwise and for which necessary evidence is furnished by the depositors to the from the post office, will not be recovered by the Income-tax Department form the bank/post office. Similarly, to the extent of the amount for which declaration in Form Nos. 15H and 15G as well as certificate under section 197 (1) are available with the bank/post office, the department would not make recovery from the bank/post office.

The interest accruing on the deposits held under the Senior Citizen Saving Scheme, 2004 is taxable as per the provision of the Income-tax Act, 1961 and is also liable for Tax Deductionat Source (TDS) as per provisions of section 194A of the Act.

Clarifications has been sough form the Government as to whether declaration made by the depositors under SCSS in Form No. 15H and Form No. 15G of the Income-tax Rules may be accepted by the bank and post officers. Moreover, clarification had been sought on the recovery of TDS pertaining to financial year 2004-05 and 2005-06 in the current year. After examination of the issue the Government has issued the above clarification.

TDS credit to be allowed if difference between TDS claim and TDS in AS-26 data does not exceed Rs. One lakh

TDS credit to be allowed if difference between the TDS claim and matching TDS amount reported in AS-26 data does not exceed Rs. One lac.

Section 143 of the Income-tax Act, 1961 Assessment  General Processing of returns of assessment year 2011-12  Steps to clear backlog

Instruction No. 01/2012 [F.NO.225/34/2011-ITA.II], dated 2-2-2012
The issue of processing of returns for the Asst. Year 2011-12 and giving credit for TDS has been considered by the Board. In order to clear backlog of returns, the following decisions have been taken:
(i) In all returns (ITR-1 to ITR-6), where the difference between the TDS claim and matching TDS amount reported in AS-26 data does not exceed Rs. One lac, the TDS claim may be accepted without verification.
(ii) Where there is zero TDS matching, TDS credit shall be allowed only after due verification. However, in case of returns of ITR-1 and ITR-2, credit may be allowed in full, even if there is zero matching, if the total TDS claimed is Rs. Five thousand or lower.
(iii) Where there are TDS claims with invalid TAN, TDS credit for such claims are not to be allowed.
(iv) In all other cases, TDS credit shall be allowed after due verification.

TDS Not to be Deducted on Declaration Furnished by Payee

As per Section 197, TDS shall not be deducted at source in certain cases where the payee furnishes a declaration in writing that the tax on his estimated total income of the previous year will be nil.

A payee cannot give such declaration, in case the income or the aggregate of incomes liable to TDS credited or paid in a previous year, is likely to exceed the maximum amount not chargeable to tax.

However, a resident individual payee, who is of the age of 65 years or more at any time during the previous year, may furnish a declaration that the tax on income exceeds the maximum amount not chargeable to tax.

Incomes/payments covered

A declaration as above may be made by the recipient of following incomes/payments:-

(a) In case of a resident individual:

(i) Dividends (Sec. 194).
(ii) Withdrawal from National Saving Scheme, 1987 Account 9Sec. 194EE).

(b) In case of a resident individual being a senior citizen (of 65 years or more):

(i) Interest on securities (Sec. 193).
(ii) Dividends (Sec. 194).
(iii) Interest on time-deposits with a bank and interest other than interest on securities (Sec. 194A).
(iv) Withdrawal from National Saving Scheme, 1987 Account (Sec. 194EE).
(v) Income from units of Mutual Funds or UTI (Sec. 194K).

(c) In case of any person other than a company or a firm:

(I) Interest on securities (Sec. 193).
(II) Interest on time Deposits with the bank and other interest (except interest on securities (Sec. 194A).
(III) Income from units of Mutual Funds or UTI (Sec. 194K).

Note: The facility of claiming payments of dividends and withdrawal from NSS 1987

Account under section 197A (1) is available only in the case of individuals who are resident in India. Accordingly, it is not permissible for Hindu Undivided Families and other categories of tax-payers to claim such payments without deduction of tax at source on furnishing the declaration in the prescribed from.

Declaration Form: The declaration shall be furnished in duplicate in the following form:

(I) Form No. 15G - For a resident individual (other than a senior citizen) or a personal (other than a company or a firm)

(II) Form No. 15H - For a resident individual being senior citizen (of 65 year or more)

Note: In the opinion of the Board of Editors, a declaration as above, cannot be furnished in respect of an income receivable by a minor, if the income of the minor is to be clubbed in the income of the parent under section 64(1A) and parent is liable to pay tax on his total income. The TDS on such income of the minor can, however, be claimed by the parent in his return of income.

It will be sufficient if one declaration is made in respect of the income of each year, before each person responsible for making the payment. Where payments are to be made by the same person more than once in a year, the declaration in the prescribed form may be furnished before the first payment in the year becomes due. Further, in the declaration from, particulars of only such securities, shares or, as the case may be, other deposits are to be furnished, the income from which is payable by the person to whom the declaration is furnished. For example, in a declaration furnished to Company  it is not necessary for the declarant to give particulars of the deposits for held by him in other companies.

The person responsible for making the payment shall furnish a copy of each such declaration to the Assessing Officer on or before 7th day of the month next following the month in which the declaration is furnished to him.

Tax shall not be deducted at source on payment to a contractor (including a sub-contractor) (u/s 194C) in the course of business of plying, hiring or leasing goods carriages, who furnishes his PAN to the person making such payment. [Sec.194C(6)]

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