Master the essentials of Form 15G and 15H declarations, validation, and reporting to ensure smooth TDS compliance

Are you struggling with Form 15G and Form 15H compliance for FY 2025-26? As a deductor, managing TDS (Tax Deducted at Source) declarations correctly is crucial to avoid penalties and compliance issues. This comprehensive guide walks you through every step—from collecting declarations to reporting them accurately in your quarterly TDS returns.

Whether you're handling payroll, interest payments, or vendor payments, understanding these forms is essential for seamless tax compliance.

What Are Form 15G and Form 15H?

Form 15G and Form 15H are self-declaration forms submitted by deductees requesting that no TDS (Tax Deducted at Source) be deducted on certain incomes—typically interest, dividends, or other payments—because their total tax liability is expected to be nil.

Key Differences:

• Form 15G: For individuals whose total estimated income is below the taxable limit
• Form 15H: For senior citizens (60+ years) with nil tax liability

With proper Form 15G or 15H declarations in place, you can make payments without deducting TDS. However, correct handling—from collection to reporting—is essential to stay compliant.

Step 1: Timely Collection of Declarations

The Golden Rule: Collect Form 15G or Form 15H at the beginning of the financial year or before the first payment—never after.

Why does timing matter? If a deductee submits a declaration after a payment has already been made, TDS obligations for that earlier payment remain unchanged. The declaration cannot be applied retroactively. This is why proactive collection is non-negotiable for compliance.

Pro Tip: Maintain a collection schedule aligned with your first payment due date. Send reminders to deductees before the financial year begins.

Step 2: Verification & Validation of Declarations

Once a declaration arrives, don't just file it away. Proper verification ensures compliance and prevents future complications.

Essential Verification Checks:

• PAN Verification (Mandatory): Ensure the PAN is valid, belongs to the declarant, and is correctly filled. Invalid or missing PAN makes the entire declaration defective.
• Income Eligibility Check: Verify that the estimated total income is below the taxable limit (for Form 15G) or confirm nil tax liability (for Form 15H).
• Age Verification: For Form 15H, confirm the applicant is 60 years or older.
• Completeness: Ensure all required fields are filled and the form is duly signed and dated.

Note: While the responsibility for correctness lies with the declarant, performing reasonable checks as a deductor helps avoid scrutiny, notices, and compliance risks.

Step 3: Assign Unique Identification Numbers (UIN)

After validation, assign a Unique Identification Number (UIN) to each declaration. This is a critical internal control mechanism.

UIN Guidelines:

• UINs must be unique for every form received during the financial year
• Use a structured system, e.g., FY25-26/001, FY25-26/002, etc.
• Maintain a UIN register for easy tracking and audit trail
• Avoid duplication at all costs—duplicate UINs can complicate reporting

Proper UIN documentation and digital storage make retrieval easier during audits or tax assessments.

Step 4: Maintain Secure Records

Keep organized, secure records of all Form 15G and 15H declarations—either physically or digitally. These records are essential during:

• Tax audits and assessments
• Income-tax notices and inquiries
• Internal compliance reviews

Best Practice: Use document management systems to store digital copies, maintaining version control and easy accessibility.

Step 5: Process Payments Without TDS

Once a valid Form 15G or 15H is on file, you can proceed with payments without deducting TDS on the specified amount and category.

However, this does not eliminate your reporting obligations. Even when TDS is zero, the transaction must be:

• Recorded in your books
• Tracked for TDS return filing
• Reflected in quarterly TDS returns (Form 26Q)

Step 6: Report in Quarterly TDS Returns (Form 26Q)

The most critical compliance step is accurately reporting Form 15G and 15H declarations in your quarterly TDS return (Form 26Q).

What to Report:

• UIN: The unique identification number assigned to the declaration
• PAN: The deductee's Permanent Account Number
• Name & Contact Details: Deductee's full name
• Date of Receipt: When the form was received
• Amount Paid: Payment amount with TDS shown as zero

Use TIN-NSDL utilities to fill the declaration section in Form 26Q. Ensure consistency: the declared amount must match the payment reported.

Common Reporting Errors to Avoid

Mistakes in TDS reporting can trigger notices and correction filings. Here are the most common pitfalls:

• Incorrect PAN: Double-check PAN entries—mismatches invite scrutiny
• Duplicate UINs: Using the same UIN twice creates chaos in records
• Amount Mismatches: Declared amount differs from payment amount reported
• Late Filing: Delayed TDS returns attract penalties and late fees

File on Time & Verify on TRACES

Meet TDS return filing deadlines strictly. After filing your Form 26Q, verify the filed data on the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System).

Why verify on TRACES?

• Confirm declarations are correctly captured
• Identify data mismatches early
• Prevent future notices and rectification filings

Quick Compliance Checklist for FY 2025-26

• Obtain fresh Form 15G / Form 15H for FY 2025-26
• Ensure form is received before first payment
• Verify PAN (mandatory)
• Check income eligibility and NIL tax liability
• Assign unique UIN to each form
• Maintain physical or digital copies
• Do not deduct TDS only if valid form is available
• Report declarations in quarterly Form 26Q
• Ensure amount consistency between declaration and payment
• File Form 26Q within due dates
• Verify filed data on TRACES portal

Key Takeaways

Form 15G and 15H compliance doesn't have to be complicated. By following these six steps—timely collection, proper verification, UIN assignment, secure storage, TDS-free payments, and accurate reporting—you ensure a smooth, risk-free process.

Remember: Compliance is not a one-time task. Review your processes regularly, maintain accurate records, and stay updated with any changes in TDS rules for subsequent financial years.

Struggling with TDS compliance? Our tax compliance software streamlines Form 15G/15H collection, validation, and reporting. Eliminate manual errors and ensure 100% accuracy.

Questions? Reach out to our tax compliance experts or download our detailed Form 15G/15H guide.

Disclaimer

This blog post is published by Book My Accountant (BMA) for informational purposes only. The information provided in this article is based on the Income-tax Act, 1961, and relevant tax regulations as applicable for FY 2025-26. While we have endeavored to ensure accuracy, tax laws are subject to frequent amendments and interpretations may vary based on individual circumstances.

Important: This content does not constitute professional tax, legal, or accounting advice. The information is intended as a general guide and should not be relied upon as a substitute for professional consultation with a qualified tax advisor, Chartered Accountant (CA), or legal professional. Each organization's tax situation is unique, and what applies to one may not apply to another.

Book My Accountant (BMA) does not assume any liability for errors, omissions, or inaccuracies in this content, nor for any loss or damage arising from the use of this information. The readers are advised to:

• Consult with a qualified tax professional before making any tax-related decisions
• Verify all information with the official Income Tax Department website (incometax.gov.in)
• Review Form 15G/15H instructions and guidelines issued by the tax authorities
• Keep abreast of any amendments or clarifications to tax laws and regulations

By reading this blog, you acknowledge that you understand this disclaimer and agree that Book My Accountant (BMA) shall not be held responsible for any financial, legal, or tax decisions made based on the content herein.

For professional assistance with Form 15G/15H compliance, TDS return filing, or any other accounting and tax matters, please contact Book My Accountant (BMA) directly.