Effective from April 1, 2026, the Income Tax Department has introduced Form 121, a unified self-declaration designed to replace the traditional Form 15G and Form 15H. This mandatory change aims to streamline tax compliance for resident individuals earning interest from Fixed Deposits (FDs) and other securities.
For Indian savers, this shift simplifies the process of requesting banks not to deduct TDS (Tax Deducted at Source) when their total annual income remains below the taxable threshold. Transitioning to this single-form system is a major step toward a more digital and efficient tax ecosystem in FY 2026–27.
What is Form 121 and Who Can Use It?
Form 121 is the new standard self-declaration form for resident individuals. It allows you to declare that your estimated total income for the financial year will be less than the minimum exemption limit, thereby exempting your interest income from TDS under Section 197A of the Income Tax Act.
The core benefit is the unified format. While we previously had to choose between 15G (for those under 60) and 15H (for senior citizens), Form 121 caters to everyone. Senior citizens simply need to tick a specific Senior Citizen checkbox to avail of their higher exemption benefits.
Section Title: Comparison of Old vs. New TDS Declaration Forms
The following table highlights the transition from the old regime to the new Form 121 requirements starting this April.
| Feature | Old System (Pre-April 2026) | New System (Form 121) |
|---|---|---|
| Forms Used | Form 15G and Form 15H | Unified Form 121 |
| Eligibility | Separate by Age Group | One Form (Checkbox for Seniors) |
| NRI Eligibility | Not Eligible | Strictly Residents Only |
| Reporting | Basic Income Details | Last 2 Years ITR History Required |
This table illustrates that while the process is unified, the Income Tax Department now requires more comprehensive data, such as your ITR Acknowledgement numbers from previous years, to verify your eligibility automatically.
Step-by-Step Guide: How to Fill Form 121 (Part A)
- Step 1: Personal Identification – Provide your Full Name, PAN, and current Address. Note that while there isn't a specific box for the Bank Account Number, it is highly recommended to mention it at the top of the form for faster processing.
- Step 2: Income Details – Use Nature of Income Code 5E for interest on Fixed Deposits. You must provide an estimated amount of the interest you expect to earn from that specific bank during FY 2026–27.
- Step 3: Aggregate Income (Point 13) – This is critical. You must calculate your Total Estimated Income, including salary, pension, and interest from all sources. This total must be below the taxable limit for the form to be valid.
- Step 4: ITR History (Point 14) – Fill in the Assessment Year and Acknowledgement Number for your last two filed returns. This ensures transparency and helps the bank verify your taxpayer status.
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Frequently Asked Questions
When is the best time to submit Form 121?
You should submit Form 121 in the first week of April each financial year. This ensures the bank marks your account as TDS-exempt before the first interest credit occurs, preventing unnecessary deductions.
Can NRIs submit Form 121 to save tax on NRO FDs?
No, Form 121 is only for Resident Individuals. NRIs are not eligible for this self-declaration and must pay TDS on NRO account interest as per the prevailing DTAA rates or standard rates.
What happens if I provide wrong information in Form 121?
Providing false information to avoid tax can lead to penalties under Section 277 of the Income Tax Act, including prosecution. Always ensure your estimated income stays within the legal exemption limits.
Key Takeaways
- One Form: Form 121 replaces both 15G and 15H starting April 1, 2026.
- ITR Records: Keep your last two ITR acknowledgement numbers ready before filling the form.
- Early Submission: Submit to your bank in April to avoid TDS deduction during the year.
- Resident Status: This facility is strictly for Resident Indians only.
Disclaimer
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Please consult a qualified tax professional or Chartered Accountant before making decisions regarding your tax filings.
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