Form 121: What Investors Need to Know

Every April, millions of FD holders and bond investors walk into their bank branch or log into net banking to do one thing: submit a declaration saying their tax liability is zero and ask the bank not to deduct TDS on their interest income.

For years that meant picking up either Form 15G or Form 15H. From this financial year, both are gone. They’ve been replaced by a single form — Form 121 — under the new Income Tax Act, 2025.

The core purpose hasn’t changed at all. But there are some procedural shifts worth knowing, especially if you hold FDs across multiple banks or invest in bonds.

Why were the old forms replaced?

The two-form system was unnecessarily confusing. Your eligibility depended on whether you were above or below 60, but the conditions attached to each form were different in a subtle way.

Form 15G, meant for those below 60, required that your total income including the interest you were protecting shouldn’t exceed the basic exemption limit. Form 15H for senior citizens had no such income cap — it only required that your final tax liability be nil.

That difference caused genuine confusion in practice. The Income Tax Department’s own documentation acknowledges that taxpayers often weren’t sure which form to file. The merged Form 121 removes that problem entirely.

What is Form 121?

Form 121 is a self-declaration you submit to your bank, bond issuer, or any other payer before they pay you income. You’re declaring that your estimated total tax for the year will be nil, so TDS should not be deducted.

It replaces Form 15G and Form 15H for all tax years starting 1 April 2026. The legal basis has shifted from Section 197A of the old Income Tax Act, 1961 to Section 393(6) of the Income Tax Act, 2025, but the purpose is identical.

One important thing to be clear about: Form 121 does not make your income tax-free. It only prevents the bank from deducting TDS at source. If your income ends up being taxable, you owe the tax when you file your ITR.

Who can use it?

Eligible filers:

• Resident individuals of any age
• Hindu Undivided Families (HUFs)
• Other specified entities meeting the prescribed conditions

Who cannot file it:

• Companies and firms — excluded
• Non-resident Indians — not eligible
• Anyone whose estimated tax liability is not nil

PAN is mandatory. Without it, the declaration is invalid and the payer will deduct TDS regardless.

What incomes are covered?

Form 121 can be used for the following income types:

How it compares to Form 15G and 15H

The UIN system — what’s new on the backend

This is the part most people won’t notice but is actually a significant change.

Under the old system, your bank generated a separate UIN for each Form 15G or 15H you filed with them. If you filed with three banks, you had three disconnected records with no central linkage.

Under Form 121, every declaration gets a structured 26-character Unique Identification Number prescribed by CBDT in Notification No. 1 dated 30 March 2026. It looks like this:

All declarations filed by the same PAN across different payers are now linked in the department’s records. Payers also have to upload a consolidated monthly statement of all Form 121 declarations received — even where no TDS was deducted — through the e-filing portal.

The practical implication: the tax department will have far better visibility into who is filing how many declarations and with whom. For honest filers this changes nothing. But it does mean accuracy in your declared income figures matters more than ever.

Three scenarios

• Ramesh, 66, retired
  He earns ₹2.8 lakh a year from listed corporate bonds. His total income is below the exemption threshold and his tax liability is nil. He submits Form 121 to the issuer before the coupon payment date. TDS is not deducted. Hence he qualifies.
• Mrs. Nair, 68, pensioner
  She earns ₹3.5 lakh pension and ₹4.5 lakh from bonds, so ₹8 lakh total. That’s above the exemption limit. But if her final tax liability works out to nil after the Section 156 rebate under the new tax regime, she can still file Form 121, may qualify.
• Arjun, 38, salaried
  He earns ₹14 lakh in salary and ₹1.2 lakh in bond interest. His overall tax liability is not nil, so he cannot file Form 121. The bank will deduct TDS on his interest income. He can claim it back when filing his ITR. He does not qualify.

How to submit Form 121

The process is the same as before. The key rule: submit before the income is credited or paid.

Online

1. Log in to net banking and find the Form 121 or TDS declaration section.
2. Enter your PAN, tax year (2026-27), estimated income, and nature of income.
3. Submit. The bank generates a 26-character UIN and confirms the declaration.

Offline

1. Download Form 121 from the Income Tax Department’s website or get it at the branch.
2. Fill Part A with your PAN, date of birth, estimated income, and income type.
3. Submit at the branch before the interest due date. The bank completes Part B.

What this means for FD and bond investors

For FD investors, very little changes in practice. Same process, different form number. SBI released the new Form 121 PDF on 30 March 2026. Most banks will have it available digitally.

For bond investors, it’s slightly more work. You’ll need to submit to each issuer or RTA separately before each coupon payment cycle, not just once at the start of the year. If you hold bonds across multiple issuers, track the submission deadlines per instrument.

The bigger shift is invisible to most investors — the backend is now a proper audit trail. Every declaration you file is logged, linked to your PAN, and reported quarterly. The ability to avoid TDS remains intact. The standards for accuracy around it are just higher now.

A few common questions

1. Is Form 121 compulsory?
   No. You only need it if you want to stop TDS from being deducted and your tax liability genuinely is nil.
2. Does it make my income tax-free?
   No. It only prevents deduction at source. The income is still taxable if it crosses the threshold.
3. Can HUFs file it?
   Yes, as long as their estimated tax liability for the year is nil.
4. I used to file Form 15H every April. What now?
   File Form 121 instead. The process at your bank is essentially the same.
5. What if I don’t file it in time?
   The bank will deduct TDS. You can claim the refund when you file your ITR, but the deduction can’t be reversed after it’s been made.

Sources

1. Income Tax Department — Form 121 official document: Form121
2. Income Tax Department — Form 121 FAQs: incometaxindia.gov.in/form-121-faqs