TAX TALK-04.01.2016-THE HITAVADA
CA. NARESH JAKHOTIA
Avoid casualness in submission of Form No.15G/15H
I am a senior citizen getting pension from Govt. My total income including bank interests are taxable after all deductions. Now, my query is that, am I required to submit Form 15H to bank against my FDs or not? [Nisit Ranjan Deb- email@example.com]
Let the growth in revenue comes through widening of Tax Base rather than rising of Tax Rate.
Form 15G and Form 15H are the forms on submission of which a person can get interest without deduction of tax at source (TDS). The conditions under which Form 15G and 15H may be filed are similar yet with a significant difference. Form 15H is for senior citizens and form 15G is for others. Each taxpayer needs to fully understand the specified conditions and ascertain whether he or she is eligible for filing the relevant form. Form No. 15G can be submitted only when (1) the final tax on estimated total income is expected be nil and (2) the aggregate of the interest received during the financial year should not exceed the basic exemption slab of Rs 2.5 lakhs. Form No. 15H can be submitted if the final tax liability of senior citizen is estimated to be nil.
There are various instances under the Income Tax Act-1961 where even small casual mistakes can cost you big. One such instance could be with regard to routine submission of Form No. 15G/15H.
One has to take utmost care while submitting these forms. Any person making a false statement in the declaration shall be liable to prosecution under section 277 of the Income-tax Act, 1961, and on conviction be punishable:
1. in case where tax sought to be evaded exceeds Rs. 1 Lacs, with rigorous imprisonment which shall not be less than 6 months but which may extend up to 7 years with fine;
2. in any other case, with rigorous imprisonment which shall not be less than 3 months but which may extend up to 3 years and with fine.
With e-filing made mandatory for 15G/15H, there are every chance that the taxpayer would be getting notices if they make false submission of Form No. 15G/15H. Now, one has to be all the more careful while submitting the declaration form.
In your specific case, as your pension & interest income after all deduction exceeds the applicable basic exemption limit, you cannot submit Form No. 15H.
My daughter is a salaried person. In addition to Salary income, her other sources incomes are as under:
My queries are as under:
- Interest from savings account which is less than Rs. 10,000/- in FY 2015-16
- Interest from FD which is less than Rs. 10,000/-in FY 2015-16
- Income from trading in futures & options (Derivatives).
- Which ITR form to be filled up?
- Should she inform her employer about the anticipated income from trading
in F & O?
- Her income from FD is less than Rs. 10,000/-. Is it mandatory for her to inform her employer about the FD interest amount? [An Army Veteran- -firstname.lastname@example.org]
Though doing the transactions in share market is easy, this not so with its tax treatment. Tax & accounting treatment are complicated are a bit complicated as can be seen from the first part of the query. In your specific case,
- Which ITR form to be used by taxpayer doing trading in Future & Options:
Applicability of ITR forms depends upon the nature of income of the taxpayer. Income from futures & options (F&O) is normally treated as business income & so will be taxable under the head “Income from Business & Profession” whether or not the taxpayer is carrying on any other business or profession. It may be noted that the transactions in derivatives are specifically excluded from the category of “Speculative transaction” if the transaction is carried out (a) on a recognized stock exchange (b) the securities transaction tax is paid and (c) trade is supported by contract note. Profit/Loss in derivatives (futures and options) is treated as non-speculative business even though delivery is not there in such transactions. No special tax rate is applicable for taxing profit from derivatives transactions & tax at normal rates shall be leviable on such profit.
Option to file the return in ITR-1,2, 2A or 3 is not available to any individuals if they have income under the head “Income from Business”. In such case, return could be filed either in ITR-4 or 4S. If the turnover from F & O transaction is less than 1 Crore and profit from such transactions is not less than 8% of the turnover, the return can be filed in ITR-4S. However, if the turnover in F & O transaction exceeds 1 Crore or profit from such transactions is less than 8% of the turnover, then tax audit provision would be applicable (i.e., the books of account would be required to be maintained & audited and audit report is also required to be uploaded) & return would be required to be filed in ITR-4.
An important question that emerges now is the calculation of “Turnover” so as to know whether or not the profit is not less than 8% of the turnover or to know the applicability of tax audit provision (Rs. 1 Crore & above). Turnover, in the case of F & O transactions, shall be the total of profit and loss (i.e., positive and negative figure). In short, aggregate of both the figures, whether positive or negative is considered as “turnover”. If it exceeds Rs. 1 Crore or if the income from derivative is less than 8% of the turnover as referred above, taxpayer should take precaution to maintain the books of accounts & also get it audited.
- Whether it is mandatory to inform the details of other income to the employer:
a] If an employee is receiving salary from more than one employer, he is required to furnish [u/s 192(2), in Form No. 12B] to one of the employer, as may be selected by the employer, the details of salary due/received by him from other employer. Only after submission of information in Form No. 12B, it becomes an obligation of the employer receiving such declaration to deduct tax at source (TDS) considering such other salary income of the employee.
b] Other than salary income as mentioned above, there is no obligation on the employee to report his other income to the employer. An employee may or may not intimate his other income to his employer. If intimated, employer has to consider such income while working out TDS (Tax deduction at Source) liability of the employee. Else, employee would be required to compute the income (including other income) and tax thereon at the time of filing his individual income tax return and would be required to pay the tax accordingly.
In your specific case, it is not mandatory to report the income from F & O and FD to the employer. However, non-reporting doesn’t absolve the person from the tax liability. Your daughter would be required to pay the tax before filing her income tax return & would be required to incorporate all the income while filing her tax return.
[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at
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