Form 121: New Nil TDS Declaration Replacing 15G & 15H in 2026

You have been submitting Form 15G or Form 15H every year to your bank, employer, or mutual fund house to ensure they do not deduct TDS on your interest, dividend, or other income. From April 1, 2026, that process changed permanently. The Income Tax Act, 2025 merged both declarations into a single unified form called Form 121 — and submissions of the old forms are no longer valid.

This is not a cosmetic rename. Form 121 consolidates two previously separate declarations, introduces different eligibility conditions for senior citizens and others, tightens the verification process, and imposes stricter obligations on both the declarant and the deductor. Here is everything your business and your clients need to know to stay compliant through FY 2026-27.

What Changed: The End of Forms 15G and 15H

Under the old Income Tax Act, 1961:

• Form 15G was submitted by residents below 60 years, HUFs, and trusts with two conditions: (1) estimated total income below the basic exemption limit, and (2) the specific income being declared (e.g., FD interest) also below that limit
• Form 15H was the senior-citizen version (60 years and above), with a more favourable single condition — that the total estimated tax liability for the year was nil

This two-form structure created confusion year after year. Taxpayers submitted the wrong form, deductors accepted incorrect declarations, and the Income Tax Department had to reconcile two parallel systems in quarterly returns. The Income Tax Act, 2025 — effective April 1, 2026 — consolidates both into Form 121, governed by Section 392(5) read with the Income Tax Rules, 2026.

What Form 121 Covers

Form 121 is a self-declaration submitted by a taxpayer (individual, HUF, or trust) to a deductor (bank, employer, company, or other specified person) requesting that TDS not be deducted — or deducted at a lower rate — on a specified payment. It applies to:

• Interest on fixed deposits, recurring deposits, and savings accounts
• Dividend income from shares and mutual fund units
• Commission and brokerage income below the deduction threshold
• Income from units of mutual funds
• Rent income where the deductor is a specified person under the new Act

Who Can Submit Form 121

The eligibility framework under Form 121 retains the core structure of the old system but unifies it into one form with category-specific conditions:

Residents Below 60 Years (and HUFs, Trusts)

Two conditions must both be satisfied:

1. 1Total income condition: Estimated total income for FY 2026-27 must be below the basic exemption limit of ₹3,00,000
2. 2Specific income condition: The income from the specific deductor for which nil TDS is sought (e.g., FD interest of ₹1,20,000 from HDFC Bank) must also be below ₹3,00,000

If a person below 60 has total income of ₹2,50,000 but FD interest of ₹3,20,000 from a single bank, they cannot submit Form 121 to that bank — the specific income condition fails.

Senior Citizens (60–79 Years)

Only one condition applies: estimated total tax liability for FY 2026-27 must be nil. This mirrors the favourable condition from old Form 15H. A senior citizen with gross income of ₹4,50,000 who has deductions and allowances under the old tax regime that bring tax liability to zero can still submit Form 121.

For FY 2026-27, the basic exemption limit for senior citizens is ₹3,50,000. Any senior citizen with total income below this threshold automatically qualifies. Those with income above ₹3,50,000 need to verify that their deductions under the old regime bring tax to nil.

Super Senior Citizens (80 Years and Above)

Same single-condition rule — estimated tax liability must be nil. The basic exemption limit for FY 2026-27 is ₹5,00,000, which means most super senior citizens will qualify automatically.

Who cannot use Form 121:

• Non-resident Indians (NRIs) — must apply for a nil/lower deduction certificate under Section 394 of the new Act
• Companies and LLPs — categorically excluded regardless of income level
• Taxpayers whose income exceeds the applicable exemption limit and whose tax liability is not nil

Step-by-Step: How to Submit Form 121

Most scheduled banks, NBFCs, and mutual fund houses have updated their portals to accept Form 121 electronically as of April 2026. Here is the standard process:

Step 1: Gather your PAN

Submission without a valid, Aadhaar-linked PAN is not permitted. If PAN is invalid or absent, the deductor must deduct TDS at 20% — regardless of any declaration submitted.

Step 2: Estimate your total income accurately

Add all income sources for FY 2026-27: salary, pension, FD interest from all banks, dividends, rent, and capital gains. This is gross total income — do not subtract 80C, 80D, or other deductions when checking the basic exemption limit condition. Senior citizens computing tax liability under the old regime may factor in deductions to check whether their liability is nil.

Step 3: Log in to your deductor's portal

Visit the bank's net banking platform, mobile app, or branch. Navigate to "TDS Declaration" or "Submit Form 121." The exact menu path varies by institution — call the branch helpdesk if the option is not readily visible.

Step 4: Fill in the form

• PAN and assessment year (AY 2027-28 for FY 2026-27)
• Estimated total income for FY 2026-27
• Nature and estimated amount of income from this deductor (e.g., "Interest on FD — ₹1,40,000")
• Declaration that eligibility conditions are satisfied

Step 5: Retain the acknowledgement

The deductor issues an acknowledgement number on successful submission. Keep this — it will be required if any mismatch arises between the nil-deduction claim and your ITR filing.

Step 6: Repeat for each deductor separately

Form 121 must be submitted to each deductor independently. If your client has FDs in three banks and dividends from a mutual fund house, that is four separate Form 121 submissions.

Practical Example

Prakashbhai, aged 58, from Rajkot, has the following estimated income for FY 2026-27:

• FD interest from Axis Bank: ₹80,000
• FD interest from Bank of Baroda: ₹60,000
• Savings account interest: ₹8,000
• Estimated total income: ₹1,48,000

Both conditions are satisfied (total income ₹1,48,000 < ₹3,00,000; FD interest at each bank individually < ₹3,00,000). Prakashbhai submits Form 121 to both banks. Neither bank deducts TDS, and he has no refund to chase when filing ITR-1 in July.

Now consider an alternative: Prakashbhai also has salary income of ₹2,70,000. His total income becomes ₹4,18,000 — exceeding the ₹3,00,000 limit. Form 121 is unavailable. Both banks must deduct TDS at 10%, and Prakashbhai will need to file ITR-1 and claim a refund if his total tax liability works out to nil after deductions.

Key Differences: Form 121 vs Old 15G/15H

The practical implication for CA firms: all client letters, annual reminder templates, intake forms, and compliance checklists that reference "Form 15G" or "Form 15H" must be updated to "Form 121" with the revised eligibility matrix immediately.

Obligations on Deductors

Form 121 imposes significant obligations on banks, employers, and companies — not just on the declarant:

Verify PAN before accepting. An invalid or unlinked PAN means the declaration cannot be accepted. A deductor who accepts Form 121 with an invalid PAN remains liable to deduct TDS and may face demand notices from TRACES.

Retain copies for 7 years. Physical or digital copies of all Form 121 declarations received must be maintained from the end of the relevant assessment year. CBDT inspection teams call for these records during surveys.

Report in every quarterly TDS return. All Form 121 declarations received during a quarter must be reported in the quarterly filing — Form 138 for salary deductors or Form 140 for non-salary deductors. A deductor who accepts a declaration but fails to report it in the return is treated as having failed to deduct TDS.

Act immediately if threshold is crossed. If the declarant informs you that their income has exceeded the applicable exemption limit mid-year, deduct TDS from the very next payment. Do not wait for the next quarter or filing cycle.

Common Mistakes to Avoid

Using old Forms 15G or 15H after April 1, 2026. Some cooperative banks and small NBFCs were still accepting old paper forms as late as May 2026. Submitting the old forms is legally ineffective — TDS liability remains on the deductor.

Estimating income after deductions. Form 121 requires estimated gross total income. A client with gross income of ₹3,10,000 who plans to invest ₹1,50,000 under Section 80C cannot declare ₹1,60,000 as estimated income.

Assuming one form covers all deductors. Form 121 is per deductor. A client with income from five sources must submit five separate declarations.

Missing the annual renewal. Form 121 is valid for one financial year only. A form submitted in April 2026 for FY 2026-27 must be renewed in April 2027 for FY 2027-28.

Not informing the deductor when income rises. If a client receives a large capital gain, gift, or inheritance mid-year that pushes total income above the exemption limit, they must withdraw the Form 121 declaration and inform the deductor immediately. The Income Tax Department cross-checks Form 121 data against SFT (Statement of Financial Transactions) filings from registrars, banks, and brokers — discrepancies trigger automated CPC notices.

Key Takeaways

• Form 121 replaces both Form 15G and Form 15H under the Income Tax Act, 2025 (Section 392(5)), effective April 1, 2026
• Under-60 residents must satisfy two conditions: total income below ₹3,00,000 AND specific income from that deductor also below ₹3,00,000
• Senior citizens (60+) need only show nil total tax liability — the same favourable single condition as old Form 15H — with the basic exemption at ₹3,50,000
• Super senior citizens (80+) have a ₹5,00,000 basic exemption and the same nil-tax liability condition
• Submit per deductor, per year — one form per institution, valid for one financial year, renewed every April
• Deductors must report Form 121 data in Form 138 / Form 140 quarterly returns; accepting without reporting creates demand liability

How corpus Helps

corpus automates TDS compliance for CA firms managing multiple clients. When your client submits a Form 121 declaration, corpus flags the relevant payment stream as "nil deduction applicable" and maintains a digital audit trail for the mandatory 7-year retention period. For deductor clients, corpus's TDS module maps Form 121 acknowledgement numbers directly into your quarterly Form 138 and Form 140 filings — eliminating the risk of accepted declarations slipping through unreported. When a client's income forecast changes mid-year, corpus alerts your team so you can advise the deductor before a mismatch between Form 121 data and the ITR triggers an automated CPC notice.

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