Section 197A: No TDS Deduction in Certain Cases

Section 197A of the Income Tax Act, 1961 provides specific situations where no Tax Deducted at Source (TDS) is required to be deducted, even when the payment would normally attract TDS under other provisions.

Cases Where No TDS is Deducted

A.  For Individual Residents (Section 197A(1))

• Applies to: Interest income (other than interest on securities) under Section 194A
• Conditions:
  • Recipient is an individual resident in India
  • Submits Form 15G(for individuals below 60 years) or Form 15H (for senior citizens 60+ years)
  • Estimated total income is below the taxable limitfor the financial year

B.  For Certain Institutions (Section 197A(1A))

• Applies to: Payments to:
  • Employee’s Provident Fund (EPF)
  • Superannuation Funds
  • Approved Gratuity Funds
• No TDSon interest payments to these funds

C.  For Senior Citizens (Section 197A(2))

• Applies to: Interest on securities under Section 193
• Conditions:
  • Recipient is a resident individual aged 60+ years
  • Submits Form 15H
  • Estimated total income is below taxable limit

Key Forms & Declarations

Note: These forms are self-declarations and don’t require approval from the Income Tax Department.

Conditions for Valid Declaration

1. PAN must be quotedin the declaration form
2. Estimated total incomemust be below taxable limit:

• • ₹2.5 lakh (for individuals below 60)
  • ₹3 lakh (for senior citizens 60-80)
  • ₹5 lakh (for super seniors 80+)

3. Interest incomemust be within specified limits:

• • ₹50,000 (for Form 15G under Section 194A)
  • ₹10,000 (for Form 15H under Section 193)

Practical Examples

Example 1: Fixed Deposit Interest

• Patel (55 years) has FD interest of ₹45,000
• Total income (including interest) is ₹2.3 lakh
• Submits Form 15Gto bank → No TDS deducted

Example 2: Senior Citizen with Bonds

• Joshi (65 years) receives ₹8,000 bond interest
• Total income is ₹2.8 lakh
• Submits Form 15H→ No TDS on interest

Recent Updates (2023-24)

• Digital Submission: Forms 15G/15H can be filed online via bank portals or Income Tax website
• Multiple Submissions: Required for each payer (banks, post office, etc.)
• Verification: Some institutions may require in-person verification for first-time submissions

Common Mistakes to Avoid

1. Submitting forms with incorrect PAN
2. Failing to submit fresh forms each financial year
3. Not considering all income sources when estimating total income
4. Submitting forms when income exceeds exemption limit

Penalties for False Declarations

• Section 277: Prosecution for false statements (may include fine and imprisonment)
• Section 271H: Penalty of ₹10,000 for inaccurate particulars