Can Non Resident File Form 15G or 15 H?

Sri Rajaratnam, the famous tax expert from Chennai, in his regular tax column in The Hindu, has opined that a Non resident can submit form no 15G to avoid tax being deducted on interest income, in all such cases where there is no taxable income. This would obviously save the assessee from needless filing of return and running round the income tax officer to get the refund. The form 15G clearly provides by asking a question whether the applicant is a resident or Non resident. N Rabindranath

With due respect to the taxation stalwart, in my opinion , a Non Resident is NOT eligible to file form 15 G or 15 H . The reason of such an opinion is as under

1. The Forms 15G & 15H are declaration in prescribed forms to prevent tax at source from payments of certain types . The provision of submitting declaration in Form 15G or 15H are  given in  section 197A of the I T Act.

2. Section 197A(1)  clearly states  that declaration filed by individual RESIDENT in India.

197A. (1) Notwithstanding anything contained in  section 194 or section 194EE , no deduction of tax shall be made under any of the said sections in the case of an individual, who is resident in India, if such individual furnishes to the person responsible for paying any income of the nature referred to in  section 194  or, as the case may be, section 194EE, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.

3. Section 197A(1A) states about payments made under section 193 , section 194A or section 194K .  The provision u/s 197A(1A) is as under

197A(1A) Notwithstanding anything contained in section 193 or section 194A or section 194K, no deduction of tax shall be made under any of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 193 or section 194A or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.

Now , one should note that each section 193 , section 194A or section 194K  is meant for individual who are resident in India. The relevant portion of the section 193 , Section 194A or 194K are given as under

193. The person responsible for paying to a resident any income by way of interest on securities shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other…………

194A. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account………

194K. Where any income is payable to a resident in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India, the person responsible for making the payment shall, at the time of credit of.. ..

So, it is clear that payments covered u/s 193, 194A and 194K are for RESIDENTS only. As such under these provisions , there can not be any question of deduction of tax at source in case of Non Residents.

4. 15H is a declaration prescribed in section 197A(1C) . section 197A(3) states as under

197A(1C) Notwithstanding anything contained in section 193 or section 194 or section 194A or section 194EE or section 194K or sub-section (1B) of this section, no deduction of tax shall be made in the case of an individual resident in India, who is of the age of sixty-five years or more at any time during the previous year , if such individual furnishes to the person responsible for paying any income of the nature referred to in section 193 or section 194 or section 194A or section 194EE or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.

Here also the said provision itself is applicable only for "individual resident in India" . So there can not be any question of Non Resident filing declaration u/s 15 H of the I T Act.

Therefore, I conclude that under  the I T Act , declaration u/s 197A is not for Non Resident persons.