Businesses that fail to submit Form 15G or Form 15H declarations to the income tax department face a late fee of ₹200 per day under Section 234E, plus potential penalties of ₹10,000 to ₹1,00,000 under Section 271H of the Direct Tax Code 2025. These forms are mandatory for deductors (employers, banks, companies) who receive nil-TDS or lower-TDS declarations from payees. Applicable to any business that processes interest, salary, rent, or professional fee payments, non-compliance can trigger notices, TDS demands equal to 100% of the tax deductible, and prosecution in serious cases.

• Late filing fee: ₹200/day (Section 234E) up to the total TDS amount
• Penalty range: ₹10,000 – ₹1,00,000 under Section 271H
• TDS demand: 100% of tax deductible if declaration was not properly processed

What is Form 15G and Form 15H?

Form 15G is a self-declaration submitted by resident individuals (below 60 years) and HUFs to their deductor (bank, employer, or business) stating that their estimated income is below the basic exemption limit and no TDS should be deducted. Form 15H is the equivalent declaration for senior citizens (60 years and above). When a business receives these forms, it is legally obligated to accept, process, and submit them to the Income Tax Department.

The obligation does not end with simply collecting the form. Under the Direct Tax Code 2025, every deductor who receives Form 15G or 15H must:

• Accept the form at the beginning of each financial year (or at the time of the first payment)
• Allot a unique identification number (UIN) to each form received
• Report all received declarations in the quarterly TDS return (Form 26Q / 27Q)
• Submit details of Forms 15G/15H received to the Income Tax Department online via TRACES portal

Penalty for Not Filing Form 15G/15H

There are two distinct layers of penalties that apply when a business fails to correctly file or process Form 15G/15H declarations. The first is a statutory late fee, and the second is a discretionary penalty levied by the Assessing Officer.

1. Late Filing Fee Under Section 234E

If a deductor does not submit the details of Form 15G/15H received within the prescribed time in the quarterly TDS statement, a late fee of ₹200 per day is levied for every day of default. This fee is mandatory — the income tax department raises it automatically and it must be paid before the TDS return is processed. The maximum late fee cannot exceed the total TDS amount for that quarter.

Taxpayer Category	Late Fee (Section 234E)	Maximum Cap
Individual / HUF	₹200 per day of delay	Total TDS for the quarter
Companies and Other than Individuals	₹200 per day of delay	Total TDS for the quarter

2. Penalty Under Section 271H

Beyond the late fee, the Assessing Officer has the power to impose a penalty under Section 271H for failure to file the TDS statement (which includes Form 15G/15H reporting) or for furnishing incorrect information. The penalty ranges from ₹10,000 to ₹1,00,000.

Nature of Default	Minimum Penalty	Maximum Penalty
Non-filing of TDS return (including 15G/15H details)	₹10,000	₹1,00,000
Furnishing incorrect information in TDS return	₹10,000	₹1,00,000
Delay beyond 1 year from the due date	₹10,000	₹1,00,000 (plus 234E fee)

Note for individuals vs. companies: Both individual deductors (proprietors, freelancers paying rent or professional fees) and companies/LLPs are equally subject to Section 234E and Section 271H penalties. There is no distinction in the penalty rate based on deductor type.

What Happens If TDS Was Not Deducted?

If a business accepts Form 15G/15H but fails to upload or process it correctly, and the Income Tax Department finds that TDS should have been deducted, the deductor can be treated as an "assessee in default." This triggers:

• TDS demand equal to 100% of the tax that should have been deducted
• Interest under Section 201(1A): 1% per month (for failure to deduct) or 1.5% per month (for failure to deposit after deduction)
• Potential prosecution under Section 276B for willful non-payment of TDS to the government

This is why simply collecting Form 15G/15H from employees or payees is not enough. The deductor must complete the full cycle of reporting it in the TDS return and uploading details on the TRACES portal.

Due Dates for Reporting Form 15G/15H (2026-27)

As of July 2026, the reporting of Form 15G/15H details is linked to the quarterly TDS return deadlines. Businesses must ensure declarations received in a quarter are reported in the TDS return for that same quarter.

Quarter	Period	TDS Return Due Date (Non-Government)	TDS Return Due Date (Government)
Q1	April – June	31 July	31 July
Q2	July – September	31 October	31 October
Q3	October – December	31 January	31 January
Q4	January – March	31 May	15 May

Who Must Collect and Submit Form 15G/15H?

Any person or entity that makes payments subject to TDS and receives a nil-deduction declaration from the payee is required to process that declaration. Common deductors who receive these forms include:

• Banks and NBFCs: For interest on fixed deposits, recurring deposits, and savings accounts
• Employers (companies, LLPs, proprietorships): For salary payments where the employee provides Form 15G
• Companies paying dividends: For shareholders whose income is below the exemption limit
• Businesses paying rent: Under Section 194I, if landlord furnishes Form 15G/15H
• Companies paying professional or contractual fees: Under Section 194J and 194C

How to Avoid Form 15G/15H Penalties?

Avoiding penalties is straightforward if the compliance process is systematic. Here are the key steps every business must follow:

1. Collect declarations at the start of the financial year: Request Form 15G/15H from eligible payees in April each year (or at the time of first payment).
2. Verify the form for completeness: Check that PAN is mentioned, the declaration is signed, and the estimated income figures are correctly filled. An incomplete or incorrect Form 15G/15H does not protect the deductor.
3. Generate a Unique Identification Number (UIN): Allot a UIN to each form received and maintain a register of all declarations collected.
4. Report in quarterly TDS returns: Include all Form 15G/15H details in Form 26Q (for non-salary payments) or Form 24Q (for salary) each quarter.
5. Upload on TRACES portal: Ensure all 15G/15H data is submitted electronically to the TRACES portal within the prescribed timeline.
6. Retain physical copies for 7 years: The deductor must preserve all original forms for at least 7 years for audit purposes.

Common Mistakes Businesses Make

Many businesses, especially small enterprises and startups, fall into compliance gaps around Form 15G/15H. The most frequent errors that trigger penalties are:

• Accepting Form 15G/15H but failing to upload it on TRACES
• Deducting TDS even after receiving a valid declaration, without refunding the excess
• Not collecting renewed declarations at the beginning of each financial year (a declaration is valid for one year only)
• Accepting Form 15G from individuals who do not actually qualify (income exceeds the basic exemption limit)
• Missing the quarterly TDS return filing deadline, which cascades into Section 234E penalties

For growing businesses handling multiple payees, a dedicated compliance calendar and an expert partner like Taxocity can significantly reduce the risk of oversight and penalty exposure.

Form 15G/15H vs. Lower TDS Certificate: What's the Difference?

Feature	Form 15G / 15H	Lower TDS Certificate (Form 13)
Who applies	Payee (individual/HUF)	Payee (any person)
Issued by	Self-declaration by payee	Income Tax Officer
Applicable to	Individuals below exemption limit	Any payee with justified lower tax liability
Validity	One financial year	Specified period as per certificate
Penalty for deductor non-compliance	Section 234E + 271H	Section 234E + 271H

TDS Filing for Businesses: End-to-End Compliance

Form 15G/15H management is just one part of a broader TDS compliance framework. Businesses also need to:

• Obtain and maintain a valid TAN (Tax Deduction Account Number)
• Deduct TDS at correct rates across all applicable payment categories
• Deposit TDS by the 7th of the following month (or 30th April for March deductions)
• File quarterly TDS returns (Form 24Q, 26Q, 27Q as applicable)
• Issue TDS certificates (Form 16 / Form 16A) to payees within due dates

For small businesses and startups, managing all this alongside core business operations is demanding. This is where professional support becomes essential. Explore our detailed guide on TDS filing for small businesses to understand the full compliance requirements.

Businesses registered as private limited companies or LLPs also face stricter TDS scrutiny. If you are planning your business structure, check out our pages on Private Limited Company Registration and Limited Liability Partnership Registration to understand your compliance obligations from day one.

How Taxocity Helps Businesses Stay Compliant

With over three decades of experience in Indian tax and compliance, Taxocity provides end-to-end TDS compliance support for businesses of all sizes — from startups to established companies. Our services include:

• TDS return preparation and filing (Form 24Q, 26Q, 27Q)
• Form 15G/15H collection management, UIN allotment, and TRACES upload
• TDS demand and notice resolution
• TDS certificates issuance (Form 16 / 16A)
• Compliance calendar and due-date alerts

Our 100% compliance guarantee means your business will not face penalties due to filing errors or missed deadlines. You get access to real human tax experts — not bots — who proactively flag issues before they become costly. With a rating of 4.8/5 from over 5,000 clients, businesses across India trust Taxocity for their tax compliance needs.

Talk to a Compliance Expert Today and ensure your Form 15G/15H filings are handled correctly this financial year.

Key Takeaways

1. Form 15G (below 60 years) and Form 15H (senior citizens) are self-declarations for nil/lower TDS submitted by payees to deductors.
2. Businesses that receive these forms must upload and report them in quarterly TDS returns — failure triggers ₹200/day under Section 234E.
3. The Assessing Officer can additionally levy ₹10,000 to ₹1,00,000 under Section 271H for non-filing or incorrect reporting.
4. If TDS was not deducted due to a defective or unprocessed declaration, the business becomes liable for 100% of the tax deductible plus 1–1.5% monthly interest.
5. A declaration is valid for one financial year only and must be renewed every April.
6. Both individuals and companies/LLPs face identical penalty provisions as deductors.

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Disclaimer: This article is for general informational purposes only and does not constitute tax advice. Tax laws and rules are subject to change. Please consult a qualified tax advisor or speak with a Taxocity expert for advice specific to your situation.