Query for form 15g

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 March 2015 Dear Sir,

Please clarify me, for my one client taken a loan form party on monthly basic paid interest and party are submit me full year for 15g of non deduction of tax on interest paid.
My client are fully loan repaid after 6 month but client are accepted form 15G full year and interest calculation for full year.
Please suggest me 15G issued from party and process of form 15g above issues for future purpose

Querist : Anonymous

Querist : Anonymous (Querist)

23 March 2015 I taken a monthly basic of 15G otherwise any other solution and rule of 15G monthly basic paid interest Pzl Suggest

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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10 August 2024 Certainly! Form 15G is used to ensure that no Tax Deducted at Source (TDS) is deducted on interest income if the taxpayer’s total income is below the taxable limit. Here’s a detailed breakdown of how Form 15G should be handled based on your query:

### **1. Understanding Form 15G**

**Purpose:**
- **Form 15G** is used by individuals whose total income is below the taxable limit, to ensure that no TDS is deducted on their income.

**Applicability:**
- It is applicable for interest income from bank deposits, fixed deposits, or other similar sources where TDS might be applicable.

### **2. Scenario Clarification**

**Situation:**
- Your client took a loan and paid interest monthly.
- The lender submitted Form 15G for the entire year, even though the loan was repaid after six months.

**Issues:**
- Form 15G was accepted for the full year’s interest, even though the loan was repaid in six months.

### **3. Process and Compliance**

**3.1 **Handling Form 15G for the Full Year:**

1. **Correct Usage:**
- **Form 15G Submission:** Typically, Form 15G should be submitted to the lender at the beginning of the financial year or when the interest income is expected. If the interest is paid monthly, the form should ideally be submitted monthly to reflect the interest payment period accurately.

2. **Monthly Submission:**
- **Monthly Forms:** To comply with TDS rules, submit Form 15G on a monthly basis if the interest is paid monthly. This ensures that TDS is not deducted each month, provided the total income for the financial year is below the taxable limit.

3. **Annual Submission Issue:**
- **Annual Form 15G Acceptance:** If Form 15G was accepted for the entire year despite the loan being repaid earlier, it could lead to issues if the total interest paid in the remaining months of the year was above the non-taxable limit. In such cases, TDS should have been deducted for the excess amount beyond the non-taxable limit.

**3.2 **Corrective Measures:**

1. **Review Form 15G Process:**
- Ensure that Form 15G is submitted at the appropriate intervals (monthly) if interest payments are made on a monthly basis.

2. **Tax Returns and Reconciliation:**
- Your client should reconcile the total interest income and tax deducted (if any) in their annual tax return. If there’s any excess TDS that was not deducted due to Form 15G, this needs to be addressed in the tax return.

3. **Documentation:**
- Maintain proper documentation and ensure Form 15G is submitted correctly to avoid future issues.

4. **Tax Advisory:**
- Consult a tax advisor to ensure compliance with the tax laws and rectify any discrepancies. They can assist with filing returns and addressing any issues related to incorrect Form 15G submission.

### **4. Rules for Monthly Payments**

**Submission Rules:**
- **Form 15G** should ideally be submitted **monthly** if the interest is paid on a monthly basis.
- **Interest Payment Period:** Each Form 15G should cover only the interest paid during that specific period (month).

**Future Compliance:**
- **Regular Submissions:** For future transactions, submit Form 15G each month for monthly interest payments.
- **Verify Interest Income:** Ensure that the total interest income across the financial year is below the taxable limit to avoid any TDS issues.

### **Summary**

1. **Form 15G Submission:** Should be done on a monthly basis if the interest is paid monthly.
2. **Corrective Actions:** Reconcile the interest income and ensure proper documentation. Consult a tax advisor if needed.
3. **Future Compliance:** Ensure Form 15G is submitted for each interest payment period to avoid TDS issues.

For precise handling and to avoid issues, it’s best to consult with a tax professional who can provide tailored advice based on your client’s specific situation and current tax laws.

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