Form 121, Form 15G and Form 15H: Complete Guide for Saving TDS on Interest Income

What is Form 121?

Form 121 is a self-declaration used by eligible taxpayers to receive specified income without deduction of tax at source. It is submitted to the payer responsible for deducting TDS. In simple terms, Form 121 tells the payer that:

• The taxpayer’s estimated tax liability for the tax year is nil .
• The taxpayer is eligible to receive the specified income without TDS.
• The taxpayer has considered earlier Form 121 declarations, if any, while estimating total income.

Form 121 is not a general request filed directly with the Income Tax Department. It is given to the relevant payer before the income is credited or paid.

Form 121 Eligibility 

Eligibility depends mainly on age, residential status, tax liability and the amount of specified income. For resident individuals below 60 and other eligible persons, such as HUFs, trusts and other non-company/non-firm persons, Form 121 can be submitted only when both conditions are met: 

• Tax on estimated total income for the tax year is nil.
• The aggregate specified income for which Form 121 is being submitted does not exceed ₹4,00,000, which is the maximum amount not chargeable to tax under the new regime for tax year 2026-27.

This second condition is important. A non-senior taxpayer may have nil tax because of rebate, but Form 121 can still become invalid if the specified income covered by the declaration exceeds ₹4,00,000.

For resident senior citizens aged 60 years or more at any time during the tax year, the additional specified income cap does not apply. They can submit Form 121 if tax on estimated total income is nil.

TDS Thresholds on Interest Income

For bank, co-operative bank and post office deposit interest, TDS applies when the interest exceeds the prescribed threshold. For tax year 2026-27, Section 393 lists the following TDS thresholds :

Form 121 does not mean the income becomes exempt from tax. It only prevents TDS where the taxpayer is eligible. The income must still be considered while calculating total income.

When to Use Form 121

Form 121 should be used when TDS is likely to be deducted even though the taxpayer expects no final tax payable for the year. Instead of waiting for a refund after filing the income tax return , an eligible taxpayer can submit the declaration in advance to avoid unnecessary deduction.

It may be useful in cases such as bank or post office interest crossing the TDS threshold, a senior citizen with pension and FD interest but nil final tax liability, an HUF with eligible interest income within the permitted limit, or a taxpayer receiving eligible dividend , mutual fund income, PF withdrawal, insurance commission or rent where Form 121 is accepted by the payer.

The key point is timing. Submit Form 121 before the income is credited or paid. For bank interest, submitting it near the beginning of the tax year is safer because TDS may be deducted as soon as interest is credited.

When You Should Not File Form 121

Do not submit Form 121 just because you want to avoid TDS temporarily. It is a legal declaration. Avoid filing it in these cases:

• Your tax liability is likely to be payable after including salary, business income, rent, capital gains, interest and other income.
• You are below 60 and your aggregate specified income is above the maximum amount not chargeable to tax.
• You are an NRI.
• You are unsure about large bonus, capital gains, business income or other income expected later in the year.
• Your interest income is below the TDS threshold and no deduction is expected anyway.

Income Types Covered Under Form 121

Form 121 is not limited only to bank FD interest. Official Form 121 guidance covers specified incomes such as accumulated balance due to employee from recognised provident fund, insurance commission, rent, income from units, interest on securities, interest other than securities, life insurance payments and dividend .

Not every income in these categories will automatically qualify. The taxpayer must still satisfy the eligibility conditions.

How to Fill and Submit Form 121

Form 121 has two main parts. Part A is filled by the taxpayer. Part B is handled by the payer or deductor after receiving and verifying the declaration.

Details you should keep ready

The Income-tax Rules require a valid and operative PAN , TAN of the payer and proof of age where the declarant claims senior citizen status. 

Where to submit Form 121

Submit it to the payer responsible for deducting TDS. For example:

• Submit it to the bank for FD or recurring deposit interest.
• Submit it to the post office for eligible post office deposit interest.
• Submit it to EPFO or the relevant authority for eligible PF withdrawal cases.
• Submit it to the company, mutual fund or other payer for eligible dividend or unit income cases.

Form 121 prevents future TDS where the declaration is accepted before payment or credit. It generally does not reverse TDS already deducted . If TDS has already been deducted:

1. Check whether the TDS appears in Form 26AS or AIS.
2. Include the related income while filing the income tax return.
3. Claim the TDS credit in the return .
4. If your final tax liability is nil or lower than TDS deducted, claim the refund through ITR processing.

Do not ignore the income just because TDS was deducted. TDS is only a tax credit, not a final tax calculation.

Common Mistakes to Avoid

• Many taxpayers check only bank interest and ignore salary, pension, rent, business income, capital gains or dividends. Form 121 should be filed only after estimating total income for the year , not just the income from one bank or payer.
• If you have deposits or eligible income with multiple payers, submit the declaration wherever required. A declaration given to one bank does not automatically cover income from another bank, company, post office or other deductor.
• Don’t assume senior citizens are automatically exempt from TDS. Senior citizens get a higher TDS threshold and a simpler Form 121 condition, but TDS is not waived automatically. If TDS is otherwise applicable, the declaration still needs to be submitted.
• Don’t treat nil TDS as tax-free income. Form 121 only prevents TDS where the taxpayer is eligible .
• For tax year 2026-27 onwards, use Form 121 instead of the older Form 15G or Form 15H format.
• If your income increases during the year and tax becomes payable, inform the payer. Continuing with an incorrect declaration can create avoidable compliance risk.

Practical Examples

Example 1: Non-senior taxpayer eligible for Form 121

Rahul is 38 years old. His salary after standard deduction and FD interest are expected to result in taxable income below ₹12 lakh. His tax liability under the new regime becomes nil because of rebate.

His FD interest of ₹65,000 is the income being declared under Form 121. This is well below the ₹4,00,000 aggregate specified income cap. Since his tax liability is also nil, Rahul satisfies both conditions and can submit Form 121.

Example 2: Non-senior taxpayer not eligible despite nil tax

Anita is 45 years old. Her total tax liability is nil after rebate, but her aggregate FD and bond interest covered by the declaration is ₹4,50,000. If the maximum amount not chargeable to tax is ₹4,00,000 under the applicable regime, she should not submit Form 121 because the specified income cap is breached. This is why the “income up to ₹12 lakh” idea should not be applied blindly.

Example 3: Senior citizen with pension and FD interest

Mr. Sharma is 67 years old. He earns pension and FD interest. After considering the applicable rebate and deductions, his estimated tax liability is nil. His bank FD interest is above ₹1,00,000. Hence, he can submit Form 121 because senior citizens only need to satisfy the nil tax liability condition. The additional aggregate specified income cap does not apply to them.

Example 4: HUF with bank interest

A HUF earns ₹2,80,000 as interest income and has no other income. Its aggregate specified income is below ₹4,00,000 and its estimated tax liability is nil. The Karta can submit Form 121 on behalf of the HUF, provided the HUF satisfies the nil tax and specified income conditions.

Consequences of False Declaration

A false Form 121 is not a minor clerical mistake if the taxpayer knowingly gives incorrect information . Section 482 of the Income-tax Act, 2025 covers false statements in verification or statements delivered under the Act or rules. The updated provision provides punishment based on the amount of tax that would have been evaded if the false statement had been accepted as true.

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Conclusion

Form 121 is the updated declaration for receiving specified income without TDS from tax year 2026-27 onwards. It replaces the older Form 15G and Form 15H structure, but the basic principle remains the same: use it only when your estimated tax liability is nil and the other eligibility conditions are satisfied.

The most important correction is that nil tax alone is not always enough for non-senior taxpayers. Resident individuals below 60 and other eligible non-company/non-firm persons must also check the aggregate specified income cap. Senior citizens have a simpler condition, but they still need to submit the form to the payer before TDS is deducted.