The Income-tax Department has introduced Form 121 under the Income-tax Act, 2025, replacing the earlier Forms 15G & 15H. This new form simplifies the process of declaring NIL tax liability to avoid TDS deduction.
It is governed by Section 393(6) and Rule 211.
๐ฏ Purpose of Form 121
Form 121 is used to declare that:
๐ Your estimated total income is below taxable limit
๐ Therefore, no TDS should be deducted
๐ค Eligibility
โ Allowed:
- Resident Individuals (all age groups)
- HUFs
โ Not Allowed:
- Companies
- Firms
- Non-residents
๐ Condition: Final tax liability must be NIL
๐ Incomes for which Form 121 can be filled
Below are the important income-wise limits where Form 121 becomes relevant for avoiding TDS:
| S. No. | Nature of Payment | Threshold Limit (Financial Year) |
|---|---|---|
| 1 | Premature withdrawal of EPF | โน50,000 |
| 2 | Interest on securities (debentures, govt. bonds, etc.) | โน5,000 / โน10,000 |
| 3 | Dividend income | โน10,000 |
| 4 | Interest from Bank, FD, RD | โน50,000 (โน1,00,000 for senior citizens) |
| 5 | National Saving Scheme (NSS) withdrawal | โน2,500 |
| 6 | Insurance commission | โน20,000 |
| 7 | Maturity proceeds of life insurance | โน1,00,000 |
| 8 | Rent (land/building/plant/machinery) | โน50,000 per month OR โน6,00,000 annually |
| 9 | Income from mutual fund units | โน10,000 |
๐ These limits are important triggers for TDS, and Form 121 helps avoid deduction only if tax liability is NIL.
โ ๏ธ Important Practical Point (Very Important)
Even if your income crosses above limits:
๐ TDS applies
๐ BUT if your total income is still below taxable limit, you can submit Form 121
โ Example:
- FD Interest = โน60,000 (above โน50,000 limit)
- Total income after deductions = โน2,00,000
๐ Still eligible for Form 121 (because tax = NIL)
๐ Structure of Form 121
๐งพ Part A (By Taxpayer)
- PAN, Name, DOB
- Estimated income
- Nature of income (interest, rent etc.)
- Total income estimate
- ITR filing details (last 2 years)
๐ฆ Part B (By Payer)
- TAN, PAN
- UIN (Unique Identification Number)
- Declaration records
๐ Filing Timing
| Activity | Timeline |
|---|---|
| Submission by taxpayer | Before income is credited |
| Monthly reporting by payer | By 7th of next month |
| TDS return reporting | Quarterly |
๐ Process Flow
๐จโ๐ผ Taxpayer:
- Check eligibility (tax NIL)
- Fill Form 121
- Submit to bank/payer
- Submit separately to each payer
๐ฆ Payer:
- Verify form
- Generate UIN
- Upload monthly statement
- Report in TDS return (Form 140)
๐งฎ Practical Examples
๐ Example 1: Bank Interest Case
Interest = โน70,000
Deductions = โน2,00,000
๐ Taxable income below limit
โ Submit Form 121
โ No TDS
๐ Example 2: Rent Case
Rent received = โน60,000/month
๐ TDS applicable (above โน50,000/month)
BUT
Total income after deductions = NIL
โ Form 121 can be submitted
โ No TDS
๐ Example 3: Wrong Declaration
Dividend = โน2,00,000
Total taxable income = โน8,00,000
โ Cannot file Form 121
โ If filed โ penalty risk
โ๏ธ Key Features of New Form 121
- Single unified form (15G + 15H merged)
- Smart pre-filled system
- Real-time validation
- AIS integration
- UIN tracking system
โ Important Compliance Notes
- PAN is mandatory
- Separate form for each payer
- Valid only for one financial year
- Income must still be reported in ITR
- Incorrect declaration may attract penalties
