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15-G/H form

Sunali (Learner) (1317 Points)

16 September 2008

Can a commission agent e.g. Insurance Agents file form no. 15 G or 15 H so as to advise the commission payee..e.g. LIC for not deducting TDS...?

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daVe.. (Student) (1431 Points)
Replied 16 September 2008

Hi Sunali, the following is an extract from Mr. S. Rajaratnam's answer to a Senoir citizen's question on the above issue, published in "The Hindu". Hope this will resolve your query.

Question:

I am aged 80 years having no taxable income. I am an agent of LIC. Tax is deducted as soon as my commission touches Rs. 5,000 in a year. LIC is not prepared to accept Form 15G or 15H. Therefore, it becomes necessary to file a nil return to the ITO along with Form No. 13 to get the refund. How long should I continue to do this at my advanced age and failing health? My personal pleading to the ITO did not have any effect for giving a permanent exemption certificate for TDS. Many agents are having similar problems. How is LIC commission different from other types of income to prevent the use of Form 15G/ 15H for TDS exemption?

Answer:

Sec. 194D provides for TDS from the insurance agency commission, where the aggregate amount during any financial year exceeds Rs. 5,000. Sec. 197A provides for self-declaration on securities, other interest under Sec. 193 and 194A respectively, besides interest on deposits from National Savings Scheme under Sec. 194EE and income from mutual funds under Sec. 194K. Sec. 194D and some other sections such as commission to lottery agents under Sec. 194G, commission and brokerage under Sec. 194H, rent under Sec. 194I, fees for professional services under Sec. 194J and payments of chargeable income to non-residents under Sec. 195 do not provide for self-declaration in Form 15G/ 15H, even when the recipient is not liable to tax.

The only recourse for those covered under these sections, including Sec. 194D in the reader’s case, is to get a certificate of nil deduction under Sec. 197. It is clear from the reader’s facts that he eminently qualifies for such certificate being a senior citizen with income far below the exemption limit of Rs. 1.95 lakh. It is most unfortunate that the income-tax administration is not geared for issue of certificates of nil deduction or deduction at a lower rate provided under Sec. 197 in deserving cases. The response for such application from different officers has not been uniform. A complaint to the next superior officer and on failure to Ombudsman is less expensive exercise than a writ petition, which is the only other remedy. It is understood that there is a large number of insurance agents affected by tax deduction, where no tax is payable, because of the indifference on the part of the tax administration in exercising its duty under Sec. 197. Probably, LIC should take up the matter as a public sector organisation interested in its agents.