Non-Deduction of Tax
Introduction
Tax is not required to be deducted on certain payments if either the payer is a specified institution or the recipient submits a self-declaration for nil TDS. Eligible recipients must file Form 15H (for senior citizens) or Form 15G (for others).
Eligibility for Filing a Declaration:
A declaration can be filed for the following provisions if:
- The recipient’s income does not exceed the basic exemption limit.
- Tax on his total estimated income is nil.
- Resident Individuals (Non-Senior Citizens)
o Dividend (Section 194)
o National Savings Scheme (Section 194EE)
- Other Non-Corporate Taxpayers
o Provident Fund Payments (Section 192A)
o Interest on Securities (Section 193)
o Interest (Other than Securities) (Section 194A)
o Insurance Commission (Section 194D)
o Life Insurance Payments (Section 194DA)
o Rent (Section 194-I)
o Income from Units (Section 194K)
- Resident Senior Citizens (60+ Years)
A declaration can be filed for the following provisions if the tax on the estimated total income after considering the rebate under section 87A is nil:
o Provident Fund Payments (Section 192A)
o Interest on Securities (Section 193)
o Dividend (Section 194)
o Interest (Other than Securities) (Section 194A)
o Insurance Commission (Section 194D)
o Life Insurance Payments (Section 194DA)
o Deposit under NSS (Section 194EE)
o Rent (Section 194-I)
o Income from Units (Section 194K)
Submission Process
- Forms 15G/15Hare submitted in duplicate to the payer (in paper or electronically).
- PAN/Aadhaar must be provided.
- The payer issues a Unique Identification Number (UIN) and reports it quarterly to the Income-tax Department under his DSC within 15 days from the end of the first, second and third quarters; 30 days from the end of the fourth quarter.
- Payer must report transactions covered byForm 15G/15Hin the quarterly TDS return, even if no TDS is deducted.
- When the estimated income of the payee changes, he needs to file a newForm No. 15G/15H. [Notification No. 6/2017, dated May 30, 2017]
Record Retention
Declarations must be retained for a period of 7 years for verification by tax authorities.
Specified Payments Exempt from TDS
Government-Notified Exemptions:
- Payments to the National Pension System (NPS) Trust.
- Interest payment by Offshore Banking Units to non-resident or not-ordinarily resident.
- Interest payment by IFSC banking units to non-resident or not-ordinarily resident. [Circular No.26/2016 Dated 4-7-2016]
- Certain bank commission or charges (e.g., bank guarantee commission, credit card commissions, etc.) to a prescribed Indian bank or any Payment System Company authorised by RBI. [Notification No. SO 2143(E), dated 17-6-2016]
- Payments for software acquisition, provided certain conditions are satisfied. [Notification S.O. 1323(E), dated 13-6-2012]
- Dividend payments between IFSC aircraft leasing units (subject toForm 1declaration). [Notification No. 52/2023, dated 20-07-2023]
- Specified payments to IFSC entities (e.g., interest, brokerage, commission, etc.). [Notification No. 65/2022, dated June 16, 2022, Notification No. 28/2024, dated 07-03-2024, Notification No. 3/2025, dated 02-01-2025, and Notification No. 67/2025, dated 20-06-2025]
- Payments to Credit Guarantee Fund Trust for Micro and Small Enterprises, National Credit Guarantee Trustee Company Limited, Credit Guarantee Fund as referred to inSection 10(46B).[Notification No. 128/2024, dated 18-12-2024, Notification No. 1/2025, dated 02-01-2025, and Notification No. 2/2025, dated 02-01-2025]
- No TDS u/s194EEon NSS withdrawals (principal on which deduction u/s 80CCA was allowed + interest thereon) made by an individual on or after 4-Apr-2025. [Notification No. 27/2025, dated 04-04-2025]
- Certain investment fund incomes other than business income. [Notification No. 51/2015/SO 1703(E), dated 25-6-2015]
- Securitization trust income from securitization activities. [Notification SO 2185(E), dated 23-6-2016]
- Payments to Tirumala Tirupati Devasthanams (interest, rent). [Notification No. 2911(E), dated 9-9-2016]
- Payments to Air India Limited for property transfers to Air India Assets Holding Limited under a Government plan. [Notification No. 106/2021, dated 10-09-2021]
- Payment received by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) is subject to the specified conditions. [Notification F. No. 275/27/2025-IT(B), dated 18-07-2025]