10 Key Points on Form 121 Replacing Forms 15G/15H for Nil Tax
Under the Income Tax Act 2025, individuals whose total income falls below the basic exemption limit are exempt from tax liability. To eliminate the need for Tax Deducted at Source (TDS) on such income, the previous requirement to submit separate declarations using Form 15G or 15H has been replaced. This process has been consolidated into a new streamlined Form No. 121, which aims to reduce administrative complexity and simplify compliance for non-taxable salaried individuals.
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Here are ten key points to enhance your understanding of Form 121.
- Under the Income Tax Act, 2025, the earlier declarations-Forms 15G and 15H-have been merged into a new unified Form No. 121. This form acts as an important statutory declaration for taxpayers who expect their tax liability to be nil for the financial year. Ensuring accurate details in Form No. 121 is crucial for smooth communication with tax authorities and to avoid unnecessary tax deduction at source (TDS).
- Form 121 is an important declaration that individuals can submit to indicate that they anticipate having no taxable income for the year. By completing this form, taxpayers formally request that no tax be withheld at the source from their payments or credits. The individual needs to provide this declaration to the relevant payer, who will then process their payments without deducting any tax, based on the information provided in Form 121.
- Additionally, Form No. 121 covers various types of income, such as PF withdrawals or pension, insurance commission, rent, interest on deposits, income from mutual funds, payments related to life insurance policies, and dividends. The declarant must submit this form before the scheduled transaction date to ensure that tax is not deducted at source.
- Form No. 121 serves as a unified statutory self-declaration under the IT Act, 2025, replacing the legacy Forms 15G and 15H. It is submitted by taxpayers to certify that their estimated total income for the financial year remains below the basic exemption limit. By providing this form to deductors, taxpayers can ensure that Tax Deducted at Source (TDS) is not applied to specified income streams, including interest on bank and post office deposits.
- Form No. 121 is a new form that replaces the earlier Forms 15G and 15H. It can be used by all individual taxpayers, including those below 60 years of age as well as senior citizens aged 60 or above, to submit a declaration for avoiding tax deduction at source (TDS) on eligible income. However, non-residents are not eligible to file this form.
- Form No. 121 acts as a statutory self-declaration for taxpayers seeking exemption from Tax Deducted at Source (TDS). To be eligible, taxpayers must reasonably expect that their total income for the financial year will remain below the basic exemption limit, resulting in nil tax liability. A fresh declaration in Form No. 121 must be submitted for each assessment year to continue availing the TDS exemption.
- Quoting the Permanent Account Number (PAN) is mandatory when submitting the declaration in Part A of Form No. 121 by the declarant. If the PAN is not provided, the declaration becomes invalid, and the payer is required to deduct tax at source (TDS) at the applicable rate under the Income Tax Act, 2025. Part A of Form 121 must be filled out and signed by the declarant, while Part B is to be completed by the payer to acknowledge the declaration and record the details of the credit or payment.
- The declarant may submit the declaration to the payer either in physical form or electronically, provided the payer offers such a facility. This can be done through a regional office or a designated digital platform.
- Each Form No. 121 received must be assigned a Unique Identification Number (UIN). This UIN is a composite string that includes the sequence number, the relevant assessment year, and the Tax Deduction and Collection Account Number (TAN) of the payer. Additionally, payers are legally required to upload a consolidated statement of all declarations received during the month via the e-filing portal by the 7th day of the following month. To maintain data integrity, these UINs must be accurately cross-referenced in the Quarterly TDS Statement (Form No. 140).
- Physically signed Form No. 121 declarations submitted by taxpayers can be used to prepare the consolidated statement for monthly uploads on the Income Tax Department’s e-filing portal, as well as for reporting in the Quarterly TDS return.
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Important Note
This article serves as a source of information and should not be considered professional tax advice. It is important to recognise that tax laws and regulations can change frequently due to government actions. We recommend that readers confirm the information through official notifications from the Income Tax Department or seek guidance from a Chartered Accountant (CA) prior to making any financial decisions. The Financial Express disclaims any responsibility for decisions made based on the information provided in this article.