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.
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)]