Form 15G 15H for receiving Rent Payments without TDS deduction from 01-06-2016.

Form 15G 15H for receiving Rent Payments without TDS deduction from 01-06-2016. Budget 2016-17 amendment to section 197A and 194I

Enabling of Filing of Form 15G/15H for rental payments

The provision of sub-section 194-I of the Income Tax Act, 1961 provides for tax deduction at source (TDS) for payments in the nature of rent payments exceeding threshold limit of Rs. 1,80,000/- per financial year:

The TDS rate are @ 2% for use of machinery or plant or equipment and @ 10% for use of any land or building.

Section 197A of the Income-tax Act, inter alia provide that tax shall not be deducted, if the recipient of certain payments on which tax is deductible furnishes to the payer a self- declaration in prescribed Form.No. 15G/15H declaring that the tax on his estimated total income of the relevant previous year would be nil. However rent payment us/ 194I do not qualify for such declarations under existing provisions of section 197A

In spite of providing higher threshold for deduction tax under rent payments, there may be cases where the tax payable on recipient’s total income, including rental payments , will be nil.

In order to reduce compliance burden in such cases, the Budget 2016-17  has proposed to amend the existing provisions of section 197A for making the recipients of rent  also eligible for filing self-declaration in Form no 15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A.

This amendment will take effect from 1st June, 2016 and shall accordingly apply to AY 2017-18

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