FORM NO. 15G VS. FORM NO. 15H

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form no 15g and 15h

Query 1]

Sir, I work in Manufacturing Co In MIDC Area in Nagpur. It would be of great help if you give clear cut clarification regarding the TDS matters. I have following queries.

  1. As per instruction of CBDT circulars, from 01.04.10 if any transporter gives PAN /PAN Card then no TDS is to be deducted. If the transporter doesn’t furnish PAN, TDS is to be done@ 20%. But I read in some articles that this new rule is not for transporters only but also for others categories of tax payment. Is this really true?
  2. What rules are to be followed for deducting TDS while making payments  of Labour Suppliers, Contractors & Other Consulting Firms considering points mentioned in (1) above?
  3. What to do while deducting TDS of salaried individuals on monthly basis? Is this rule applicable for Individuals as they also posses PAN?
  4. Should we intimate our clients regarding this rule as they are deducting TDS while making payments to us? [prasad.naib@gmail.com]

Opinion:

  1. In order to strengthen the PAN mechanism, a new section 206AA has been inserted with effect from April 1, 2010 which provides as under:
    a) Every person whose receipt are subject to deduction of tax at source (i.e. the deductee) shall furnish its PAN to the deductor. It will be compulsory from 01.04.2010.
    b) If such person does not furnishes PAN to the deductor, the Deductor shall be required to deduct tax at source at higher of the following rates-
    i) At the rate prescribed in the Act.
    ii) At rate in force, i.e. the rate mentioned in Finance Act.
    iii) At the rate of 20%.
  2. New Provision & Payment to Transport Operator:
    a) In the case of payment to transport operator, tax will not be deductible under section 194C if the transport operator furnishes his PAN to the deductor.
    b) If PAN is not furnished the rate will be @ 20%.
  3. New Provision & Payment to Labour contractor/ Supplier:
    a) In the case of payment to labour contractor, tax will be deductible @ 2% u/s 194C if the contractor furnishes his PAN to the deductor.
    b) If PAN is not furnished, the TDS Rate shall @ 20%.
  4. New Provision & Payment to Consulting Firm:
    a) In the case of payment to consultants, tax will be deductible @ 10% u/s 194J if the deductee furnishes his PAN to the deductor.
    b) If PAN is not furnished, the TDS Rate shall @ 20%.
  5. New Provision & Salary Payment:
    Section 206AA will be applicable even in respect of salary payment as well. So, if employee fails to submit the PAN, TDS may be required to be done at a higher rate.
  6. To ensure that the deductor know about the correct PAN of the deductee, there is a provision for mandatory quoting of PAN of the deductee by both the deductor and the deductee in all the corresponding bills and voucher exchanged between them. So ensure to quote your PAN in all the correspondents with the clients you are dealing with.

Query 2]

A senior citizen is having Pension Rs.240000/- and interest income of Rs.36000/- investment in PPF is Rs.70000/-. Is he eligible to file Form No.15H to the Bank since tax on his estimated total income will be Nil. Please distinguish Form No. 15G vis a vis Form No. 15H?  [PS]

Opinion:

  1. Form No. 15G is a declaration form for non senior citizens whereas Form No. 15H is for a senior citizen.
  2. In order to be eligible to furnish Form 15G, the non-senior citizen investor needs to fulfill the following two conditions:
    a) The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil, and
    b) The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab, which is Rs. 1.60 Lacs for male, Rs 1.90 Lacs for female assessee and Rs. 2.40 Lacs for senior citizens for the F.Y. 2010-11.
    If both these conditions are satisfied, Form 15G may be furnished and the entire interest income is received without tax deduction.
  3. In order to be eligible to furnish Form 15H, the senior citizen needs to fulfill just the first condition, i.e., the final tax on the assessee’s estimated total income should be nil. The second condition (as mentioned in (b) above) imposed for Form 15G is not applicable.
  4. In view of this, we are of the view that the senior citizens can file Form No. 15H so as to get the income without deduction of tax at source.

Query 3]

I had purchased a house building with ready possession in the March-2006 by availing a housing loan from ICICI Bank. Also have been regularly paying the EMI from April-2006 to the bank. Also now propose to sell this property in the current financial year (FY 2010-11)

I have following queries:

  1. Please advise whether the income would be short term capital gains or long term capital gains?
  2. I already have one property in my name, can I buy a second property to waive of the tax?
  3. Alternative, can I buy land in my home town? [Lalit Jadhav, Amravati]

Opinion:

  1. You will be selling the property after a total holding period of more than 3 years. The Capital gain would be Long Term Capital Gain.
  2. You can save Long term capital gain on sale of House property by opting an exemption u/s 54 or u/s 54EC.
    i) Exemption Under Section 54:
    Invest the amount of Long term Capital Gain on sale of house for purchase of another house property within a period of 2 years ( for construction- 3 years period is permissible) from the date of transfer of the house. In case the amount is not utilized as aforesaid for purchase/ construction before the due date of filing the return of income of the financial year in which transfer took place, the amount is required to be kept in a “Capital Gain Deposit Account Scheme” with a scheduled bank.
    ii) Exemption Under Section 54EC:
    Invest the amount of Long term Capital Gain in Specified bonds issued by Rural Electrical Corporation (REC) or National Highway Authority of India (NHAI) within a period of 6 months from the date of transfer.
    ii) You can buy the land in your home town for saving tax. In that case, you have to construct the house within a period of 3 years from the date of transfer of existing house. Land cost will also be considered for the purpose of exemption u/s 54.
  3. Words of caution:
    It may be noted that as Per section 80C, if a person is claiming House loan repayment benefit under section 80C and has sold the House within 5 years from the date of purchase of the house then all the benefit availed under this section (80C) will be reversed and will be included in the taxable income of the year in which house is sold.
    In your case you have purchased house in March ,2006 and if you sale it before March-2011 (i.e., before the expiry of the five years from the purchase of the house) then the tax benefit  (if any ) u/s 80C availed by you in the Financial year 2006-07,2007-08,2008-09 & 2009-10 will be reversed in Financial year 2010-11. Plan your transactions keeping this in Mind.

form no 15g and 15h

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