Comprehensive Analysis of Form 121: New Unified Self-Declaration for TDS Exemption under Income-tax Act, 2025

Comprehensive Analysis of Form 121: The New Unified Self-Declaration for TDS Exemption under the Income-tax Act, 2025

The introduction of the Income-tax Act, 2025 (effective April 1, 2026) has brought a major overhaul to statutory forms. Form 121 is a central piece of this simplification, serving as the new unified self-declaration form for non-deduction of tax (TDS).

Below is a detailed analysis of Form 121:

1. Overview and Purpose

Form 121 replaces the erstwhile Form 15G and Form 15H. It is a statutory declaration under Section 393 (corresponding to the new Act’s framework) that allows a resident taxpayer to declare that their estimated total income for the tax year is below the taxable limit, thereby requesting the payer not to deduct TDS.

Key Changes from the Old Framework:

• Unified Format: Unlike the previous system which had separate forms based on age (15G for under 60 and 15H for above 60), Form 121 is a single form applicable to all eligible resident taxpayers.
• Terminology: The form shifts from “Previous Year” to “Tax Year” (e.g., Tax Year 2026-27).
• Digital Integration: It is designed for enhanced compatibility with electronic filing and real-time verification.

2. Eligibility Criteria

To submit Form 121, the following conditions must be met:

3. Scope of Income Covered

Form 121 can be used to prevent TDS on various types of receipts, including:

• Interest Income: From Bank/Post office fixed deposits, recurring deposits, & savings accounts.
• Securities: Interest on bonds or debentures.
• Dividends: Income from shares and mutual funds.
• Insurance: Payments from life insurance policies or insurance commission.
• Other Receipts: Rental income (in specific cases), EPF withdrawals, and pension-related payments.

4. Structure of the Form

The form is divided into two primary sections:

• Part A (To be filled by the Taxpayer):
  • Personal details (Name, PAN, Address).
  • Estimated total income for the Tax Year.
  • Details of the specific income for which the exemption is claimed.
  • Details of other Form 121s filed during the same year.
• Part B (To be filled by the Payer/Deductor i.e Bank):
  • The payer (e.g., the bank) verifies the declaration.
  • Assigns a Unique Identification Number (UIN), a 26-character alphanumeric code.
  • Reports the declaration to the Income Tax Department.

5. Critical Compliance Notes

• Timing: The form must be submitted before the income is credited or paid. If TDS is already deducted, Form 121 cannot be used to seek a refund; that must be done through the ITR.
• Multiple Payers: If you have FDs in three different banks, you must submit a separate Form 121 to each bank.
• PAN Requirement: A valid PAN is mandatory. Without it, the declaration is invalid, and tax will be deducted at the maximum marginal rate (often 20%).
• Validity: The form is valid only for one tax year. A fresh declaration is required every April.

Note: While Form 121 prevents TDS, it does not mean the income is “tax-free.” If your actual total income at the end of the year exceeds the taxable limit, you are still liable to pay tax and file the relevant ITR (likely Form 101/103 under the new numbering system).

6. Practical Example

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Form 121 can be filed Offline (in case of Offline 2 Copy to be submitted to bank one of them would be treated as receipt copy) or Online (Net Banking / Mobile App)

FORM 121 PDF ATTACHED FOR YOUR KIND REFERENCE