The Income Tax Act, 2025, has come into force from 1 April 2026. One of the objectives of the new Act is to provide a streamlined, simplified tax code with reduced compliance and consolidated provisions. Several sections, scheduled, rules, and forms have been consolidated and reduced. The number of forms has been reduced from 399 to 190. As part of this exercise, a new Form 121 has been introduced. In this article, we will understand what Form 121 is and why it should be submitted to the bank for the Tax Year 2026-27.
What is Form 121?
As per the Income Tax Act, 1961, bank depositors had to submit Form 15G/Form 15H to the bank to avoid Tax Deducted at Source (TDS). Some depositors were confused about which of the two forms applied to them. Senior citizens (60 years and above) had to submit Form 15H, and other depositors had to submit Form 15G.
The Income Tax Act, 2025, had consolidated the two forms (Form 15G and Form 15H) into a single form (Form 121). Any depositor, whether a senior citizen or not, has to submit Form 121 to the bank to avoid TDS. A single form removes any confusion among depositors about which form applies to them.
The Income Tax website states: Form 121 is a declaration by a taxpayer to the effect that tax on their estimated total income for the Tax Year will be nil, with a view to avoid deduction of tax at source. It must be submitted to the payer concerned. Based on such a declaration, the payer will not deduct tax on income or credit due to the taxpayer.
Certain incomes are subject to TDS, which the payer must deduct at the time of making the payment and transfer it to the government. However, if your estimated total income tax liability for the tax year is nil, you can avoid TDS by submitting Form 121. The form must be submitted before the payment date.
Bank depositors need to submit Form 121 to the bank to avoid TDS on the interest earned on fixed deposits. Do you have a fixed deposit with a monthly interest payout? If you don’t want the bank to deduct TDS on interest, then you should submit Form 121 in April itself to avoid TDS in any month for Tax Year 2026-27.
Types of incomes covered in the declaration in Form 121
In the above section, we understood why bank depositors need to submit Form 121 to the bank. Similarly, if you have fixed deposits with the Post Office or bonds from corporates, you need to submit Form 121 to avoid TDS on the interest. Apart from interest on deposits, the following types of income are covered in the declaration in Form 121.
- Provident fund withdrawal and pensions
- Insurance commission
- Rent
- Income from mutual funds
- Payments in respect of a life insurance policy
- Dividends, etc.
Is the Form 121 submission a one-time process?
The submission of Form 121 is valid for a tax year (1 April 2026 to 31 March 2027 in this case). If you have a fixed deposit with a bank for more than 1 year, you must file Form 121 every tax year.
For example, Rajesh opened a 3-year fixed deposit with SBI on 10 April 2026, with monthly interest payouts. The fixed deposit will be spread across four tax years. In this case, Rajesh will have to submit Form 121 to SBI every Tax Year, for four Tax Years, to avoid TDS in each Tax Year.
The Form 121 must be submitted before the interest transaction date. If Form 121 is not submitted and the interest on the fixed deposit exceeds the specified threshold during a Tax Year, the bank will deduct tax. For senior citizens, TDS is applicable if the annual interest during the Tax Year exceeds ₹1,00,000. For other individuals, TDS is applicable if the annual interest during the Tax Year exceeds ₹50,000. The standard TDS rate is 10%. The TDS rate increases to 20% if the depositor has not submitted their PAN details to the bank.
Should Form 121 be submitted to each bank separately?
The Form 121 must be submitted separately to each payer. If you have fixed deposits with multiple banks, you will have to submit the Form 121 to each bank separately to avoid TDS. Similarly, if you have fixed deposits with the post office, you will have to submit a separate Form 121. If you are receiving pension, rent, insurance commission, dividends, etc., a Form 121 must be submitted to each payer separately to avoid TDS.
What happens if Form 121 is not submitted on time?
Timely submission of Form 121 ensures there is no TDS. However, if, for some reason, you are not able to submit Form 121 on time and tax is deducted, you can always claim a refund at the time of filing the Income Tax Return (ITR).
At the time of filing the ITR, if the TDS collected is more than the tax payable, you will be eligible for a refund. Once the ITR is filed and processed, the refund will be initiated. SBI will credit the refund to your savings bank account.
Timely submission of Form 121 ensures that no excess tax is deducted and that there is no need to claim a refund at the time of filing ITR. It saves time and effort and simplifies tax filing.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached on LinkedIn.
