New Income Tax Act 2025 Replaces Form 15G and 15H With Form 121; A Simple Way to Avoid TDS

Making a major change, the Income Tax Department has implemented the new Form 121 under the Income Tax Act, 2025. This new form will replace the old Form 15G and 15H. The purpose of this change is to simplify the process for taxpayers so that they can easily declare that their total income is below the taxable limit, and TDS (Tax Deducted at Source) should not be charged on them. This new provision has been implemented under Section 393(6) and Rule 211.

Purpose of Form 121

The main purpose of Form 121 is to enable taxpayers to declare in advance that their estimated total income is less than the taxable limit. In such a situation, banks or other institutions should not deduct TDS on their income.

Who can use Form 121?

Allowed:

Resident Individuals and HUF (Hindu Undivided Family) can use this form.

Not Allowed:

• Companies: No company can fill this form.
• Firms: This form is also not allowed for partnership firms or LLPs.
• Non-residents: Only residents of India can fill this form.

To which income does Form 121 apply?

Below are the types of income and their limits where TDS is applicable and can be avoided through Form 121:

An important thing that every taxpayer should understand

•  TDS may still apply if your income exceeds these limits.
•  But if the total income after deductions is below the taxable limit, then you can fill out Form 121.

What is the structure of Form 121?

Part A (To be filled by the Taxpayer):

• PAN, Name, Date of Birth
• estimated income
• Type of income (interest, rent, etc.)
• total estimated income
• ITR information for the last 2 years

Part B (To be filled by the Payer):

• TAN (Tax Deduction and Collection Account Number), PAN( Permanent Account Number)
• UIN (Unique Identification Number)
• record of declaration

When is it necessary to submit the form?

How does the whole process work?

Taxpayer’s Responsibility:

First of all, the taxpayer has to ensure that his final tax liability is nil (NIL). After this step, fill Form 121 with the correct information. This form is required to be submitted separately to each payer (such as a bank) from which the income is being received.

Payer’s Responsibility:

The payer verifies the received form, then generates a Unique Identification Number (UIN) for the form. Also, they has to upload the relevant information every month, and it is mandatory to report this detail in the TDS return (Form 140) also.

Special features of the new Form 121

• Forms 15G and 15H have been combined into a single unified form, simplifying the process.
• Much information will be pre-filled in the form, which will make it easier to fill.
• A real-time verification facility is provided in the system.
• This form is linked to AIS (Annual Information Statement), making the matching of information easy.
• Tracking of each form has become simple through the UIN (Unique Identification Number).

Important rules to keep in mind

• It is mandatory to provide PAN while filling Form 121.
• Separate forms have to be submitted for each payer (like a bank or other institution).
• This form is valid only for one financial year.
• Even after filling the form, it is necessary to show the relevant income in the ITR.
• Providing wrong or misleading information may result in a penalty.

Form 121 is being considered a big relief step for taxpayers. This has not only made the process easier, but now a single simple form will be enough to avoid TDS. However, it is very important to give correct information while using it; otherwise, it may cause problems.