Form 121 Nil TDS Under Income Tax Act 2025

Form 121: The New Form for Nil TDS under Income Tax Act 2025 With the implementation of the Income Tax Act, 2025 (effective from April 1, 2026), the g

Form 121: The New Form for Nil TDS under Income Tax Act 2025

With the implementation of the Income Tax Act, 2025 (effective from April 1, 2026), the government has streamlined the process for taxpayers to claim exemption from Tax Deducted at Source (TDS). The most significant change is the introduction of Form 121, which officially replaces the Form 15G and Form 15H.

Note : Form Download Link are Given at the end of Post

Key Changes and Features

• Unified Form: No more age-based distinction. Both individuals under 60 and senior citizens now use Form 121.
• Legal Provision: Filed under Section 393(6) of the new Act.
• Digital First: Designed for seamless integration with the e-filing portal to reduce manual errors.
• Broader Coverage: Applies to interest on deposits, dividends, insurance commission, and rental income.

Eligibility Criteria

To submit Form 121, the following conditions must be met:

1. You must be a Resident Individual or HUF.
2. Your estimated total tax liability for the financial year must be Nil.
3. A valid PAN must be provided (otherwise, tax is deducted at 20%).
4. Submit the form to the payer/Deductor.

Note: Submission of these forms does not make the income free from income tax; it only prevents TDS being deducted if conditions are met.

Process of Filing Form 121

For Declarant (Individual/HUF):

1. Check eligibility:
1. Resident individual or HUF/trust (not a company/firm) whose final tax liability is nil for the year.
2. Total income (including interest and whatever income is subject to TDS) should be such that the expected tax liability is NIL.
3. Valid PAN is mandatory.
2. Obtain the form:
1. Download Form No. 121 from the official site of the Income-tax Department or the bank/financial institution’s website.
2. Many banks support online submission of the form via internet/mobile banking.
3. Fill in the declaration:
1. The form typically asks for: Name, PAN, Status (Individual/HUF/trust), Tax Year,
2. Residential status, estimated total income, details of the income for which the
3. declaration is being filed, etc.
4. Submit the form to the payer/deductor:
1. Submit to the bank/financial institution/employer that will make the payment (e.g., interest, dividend).
2. Submission can be manual or online, depending on the payer. The bank/finance company may provide an online facility.
3. The form is valid for the Tax Year concerned; if eligible, one should submit at the beginning of the year or before the payment/credit to avoid TDS.

For Bank / Institution / Payer:

1. Receive Form No. 121 from declarants:
1. When a person (i.e. declarant) submits the declaration, the payer needs to verify eligibility (PAN, Status, etc.) and record the form.
2. Assign Unique Identification Number (UIN):
1. The payer assigns a UIN for each Form 121 received. This UIN has multiple components (Sequence Number, Tax Year, TAN of payer).
2. The sequence number should align with the paper declaration (if paper) and the online record.
3. Submit statement to Income-tax Department:
1. The payer is required to upload a consolidated statement of all Forms 121 received on a monthly basis through the e-filing portal of the Income-tax Department (via TAN login) even though no TDS is deducted.
2. Steps:
1. Ensure the payer has a valid TAN and is registered on the e-filing portal.
2. Download the CSV utility.
3. Login via TAN on Income Tax e-Filing portal → e-File → Fill Form No. 121 (select applicable Form, Year, Month, Filing Type) → Attach CSV + Signature → Upload.
4. After upload, the status will show “Uploaded”, then after processing “, Accepted” or “Rejected”.
4. Quote the UIN in quarterly TDS returns:
1. Even though no tax is deducted at source under Form No. 121, the payer must quote the declarant's UIN in the quarterly TDS statement in Form No. 140 to ensure the records align.

Outcome of Declaration

For Payers (Deductors):

• Enables validation of declarations and ensures no TDS is deducted where eligible.
• UIN facilitates reconciliation with Form No. 140 and the Income-tax Department’s records.
• Non-compliance (e.g., missing UIN or incorrect reporting) may incur penalties under the relevant provisions.

For Declarants (Deductees):

• Ensures no deduction of tax where income is below the taxable limits.
• Reduces the need for refunds and simplifies tax filing.
• Declaration data is reflected in Form No. 168/AIS, confirming submission and linkage with PAN.

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form no 121 of income tax act, form no 121 of income tax act