After 01/10/2014 all the insurance companies are deducting the tax at source for policies which are not coming under the tax exemption rule for insurance maturity proceeds 10(10)(D). For policies not fulfilling the criteria of 10(10)(D) and where the maturity amount for the same customer in a financial year is more than Rs. 100000Â insurance companies now deducting 2% tax where PAN is available and 20% where PAN is not available.
But from 01/06/2015 a recipient of maturity proceeds can submit self declaration in prescribed form no. 15H/15G for non deduction of tax at source to his/her insurer.
The existing provisions of section 197A of Income tax act 1961 provide that tax shall not be decucted under section 193 (Interest on Security), 194 (Dividends) and 194A (Interest other than “interest on securities”), if the recipient of the payment furnishes to the payer a self declaration in prescribed Form No. 15H/15G declaring that tax on his estimated total income of the relevant previous year would be nil. This provision is amended vide Finance Act 2015 to include payments referred to in section 194DA of Income tax Act 1961 w.e.f 01/06/2015. It means, recipient of payments referred to in section 194DA are also eligible for filling self declaration in form No. 15H/15G for non deduction of tax at sourceÂ w.e.f 01/06/2015.
While submitting Form No. 15H//15G following points to be kept in mind:
- Form 15G is for Resident individuals other than senior citizens.
- Form 15H is exclusively for Resident senior citizens.
- Form 15G/15H in duplicate is required to be submitted to insurer by policy holder.
- It is very necessary to furnish the valid PAN in Form 15G/15H. If fails to furnish the same tax is to be deducted at the rate of 20%.