New Income Tax Act: The commonly used Forms 15G and 15H are now being replaced by a new Form 121. This change has been implemented under the Income Tax Act, 2025. Let us understand for whom this is mandatory and why.
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New Income Tax Act: The commonly used Forms 15G and 15H are now being replaced by a new Form 121. This change has been implemented under the Income-Tax Act, 2025. The objective is to simplify the declarations used to seek exemption from TDS (Tax Deducted at Source) deductions. However, this will result in changes to both the procedure for filling out the form and the eligibility criteria for doing so.
What is Form 121?
Form 121 is a self-declaration submitted by a taxpayer on their own behalf. Through this declaration, the taxpayer states that their estimated total income for the financial year is nil. Consequently, no TDS should be deducted from their income. When a taxpayer submits this form to their bank or company, the institution will not deduct TDS on that income, provided that the declaration is accurate and valid.
What will change regarding Forms 15G and 15H?
The most significant change is that, instead of two separate forms, a single form will now be used. Under the previous rules, Form 15G was intended for individuals under the age of 60, whereas Form 15H was exclusively for senior citizens (aged 60 or above).
Now, under the new regulations, Form 121 will serve as a common form for all eligible individuals, regardless of their age. This eliminates the need to select different forms based on age, thereby making the tax process simpler and more streamlined.
Who can fill out Form 121?
The following individuals are eligible to fill out Form 121:
· Indian citizens, whether under or over the age of 60.
· Hindu Undivided Families (HUF).
· Certain other eligible entities.
However, some individuals are not eligible to fill out this form, such as companies and firms, and non-residents.
On which types of income is TDS not deducted under Form 121?
This form can be utilized to prevent TDS deductions on various types of income, such as interest earned on bank deposits, dividends, rent, insurance commissions, income from mutual funds, life insurance proceeds, Provident Fund (PF) withdrawals, and pensions.
Is it mandatory to fill out Form 121?
No, filling out this form is entirely optional. It is intended solely for taxpayers whose taxable income is nil and who wish to avoid having TDS deducted from their earnings upfront. If you choose not to fill out this form, TDS will be deducted as per standard procedures; you may subsequently claim a refund for this amount when filing your income tax return.
How do I submit Form 121?
You can submit this form online, provided that the entity (the ‘payer’) to whom you are submitting it offers a facility for digital submission. Alternatively, you can submit the form through the payer (e.g., a bank or company). The payer is required to electronically upload the details contained in this form onto the Income Tax e-filing portal. Additionally, they must report these transactions in their quarterly TDS statement (Form 140).
What Points Should Be Kept in Mind?
Although the new form simplifies the process, the taxpayer’s responsibility has not diminished. If you are, in fact, liable to pay tax and you make a false declaration, you may face penalties or legal consequences.
If your income is derived from multiple sources, you may be required to submit separate Form 121s at different locations. If you submit the form late, it will not be considered valid for the purpose of preventing TDS, and TDS may still be deducted.
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