The one tax form you absolutely, urgently need to fill now…here’s more

It has been more than a month since the new financial year began. It’s also been more than a month since the new Income Tax rules kicked in.

One of the biggest changes, which has largely gone under the radar, is the release of the new form for exemption from Tax Deduction at Source (TDS) by banks, post office and even provident funds.

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Form 121 replaces the years-old forms 15G and 15H. The new 4-page form, available easily on the internet, makes filing simpler, less intrusive and more streamlined. Earlier, form 15G had to be filled and submitted by taxpayers below 60 years of age. Form 15H was for senior citizens.

 

Why The Urgency?

All maturities after April 1, 2026 are subject, as before, to TDS. The income tax department will not wait with its razor! At least 10 per cent of the gains you’ve made on your financial instruments will immediately be shaved off. Less money will be credited to your account. And, there’s no way to get the money back from the clutches of the department except by filing an income tax return and claiming a refund.

Form 121 avoids this hassle. It makes life easier for you, but only if your income is below the taxable limit.

It could be investments in the names of your children and other dependents with interest or dividend. It could be a member of the family with income only from bank fixed deposits or rent. Or, it could be withdrawals from your Employee Provident Fund (EPF) or Public Provident Fund (PPF).

Pre-empting TDS by filling up and submitting Form 121 will ensure the amount credited to your account has not been intercepted and taxed by the government.

 

Who Can File The Form?

Your interest income from savings accounts may be below the ₹10,000 exemption limit. But, you will not be eligible to fill Form 121 if your total income is above the taxable threshold. Effectively, your total tax liability for the entire year should be ZERO after deductions and exemptions.

You should also be a resident in India and have filed Form 121 before the tax deduction. Once the IT department’s has done its work, nothing can reverse the fund outgo except a tax return.

 

What Does Form 121 Cover?

The scope of Form 121 is wide. It covers everything from interest on bank fixed deposits and savings accounts to interest on post office deposits as well as securities and bonds.

For those invested in stock market, TDS kicks in if your dividend income is above ₹10,000 a year. Filing Form 121 ensures you are not subject to a deduction. Same is for income from mutual funds and even from rental income.

For those withdrawing funds from their PF accounts face a 10 per cent TDS if the withdrawal exceeds ₹50,000 and occurs before 5 years of continuous service. If Permanent Account Number (PAN) is not provided, the rate increases to 30%. Filling the form on time helps you avoid deduction from this amount. Incidentally, TDS is not deducted if service exceeds 5 years or the total withdrawal is under ₹50,000.

 

What You Need To Know

Form 121 has two sections – Part A and Part B.

Part A is for your personal information and the details of your income. This includes your PAN, information about your income, amount for which the form is being filled, total number of Form 121 filled and details of your IT returns for the past two years.

Part B has to be filled by the bank or the entity paying the income from which TDS is to be deducted.

The form has to be filled for each source of income. While PDF files of the form are easily available to download, the details can be entered online as well on the website of the payees.

 

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