Form 121 is a unified declaration under the Income Tax Act 2025 that allows taxpayers to prevent TDS deduction by confirming they have no taxable income.
Saloni Kumari | Apr 10, 2026 |
Form 121 Explained: A Simpler Way to Avoid TDS Under New Income Tax Act 2025
As we are all aware of that, the new Income Tax Act 2025 has already come into effect from April 01, 2026. With this change, the government has tried to simplify tax rules for taxpayers without affecting the earlier tax rates. The key objective is to reduce the scope of litigation and eliminate uncertainty from the country’s tax system.
Numerous sections, schedules, rules and forms have been consolidated and reduced. Previously, a total of 819 sections were available under the Income Tax Act 1961; now, these sections have been reduced to just 536. Similarly, chapters have been reduced from 47 to 23. The total words have been reduced from 5.12 lakh words to around 2.6 lakh words.
The total number of forms has been decreased from 399 to 190 in the new Income Tax Act 2025. As part of this amendment, the tax authorities have introduced a new Form 121. Today, we will understand what this form is about and how to furnish it for the Tax Year 2026-27.
Form 121 is a statement by a taxpayer submitted to the concerned payer. Through this form, a taxpayer asks their payer not to deduct TDS from their payments because they have no tax liability. Considering this statement, the payer does not deduct any tax on taxpayers’ income or credit dues.
In order to avoid Tax Deducted at Source (TDS), bank depositors had to furnish Form 15G/Form 15H, under the Income Tax Act, 1961. Depositors often face confusion regarding which form belongs to them. Senior Citizens possessing an age limit of 60 years and above are required to file Form 15H, and all others have to file Form 15G.
Two forms, i.e., Form 15G and Form 15H, have been amalgamated into a single Form 121, under the Income Tax Act 2025. Now, both senior citizens and others are required to furnish the same form, i.e., Form 121, to the bank in order to avoid TDS. This amendment has removed confusion among deposits regarding which form belongs to them.
Income sources from provident fund withdrawal, pensions, insurance commission, rent, mutual funds, payments in respect of a life insurance policy, dividends, etc., are covered under this Form 121.
Concerned taxpayers can furnish Form 121 for the tax year 2026-27. You will be required to file Form 121 every tax year if you have a fixed deposit with a bank for a period of more than 1 year.
You must submit the form before the interest transaction date. In case you do not submit Form 121 and the interest on the fixed deposit exceeds the specified limit during a Tax Year, then TDS will be deducted by the bank. TDS will apply for senior citizens if the annual interest exceeds the threshold of Rs 1 lakh during the Tax Year, and if the annual interest exceeds Rs 50,000 during the tax year, then TDS will apply to individuals other than senior citizens.
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