New financial year alert: First task for FD investors is to file Form 15G/H or is it Form 121 now?

As the new financial year begins, fixed deposit (FD) investors should prioritise an important compliance step — submitting a declaration to avoid unnecessary Tax Deducted at Source (TDS) on interest income. Traditionally, this meant filing Form 15G or Form 15H. However, from April 1, 2026, the process has been streamlined with the introduction of a new unified Form 121, raising a key question: do the old forms still apply?

Form 121 replaces 15G and 15H

Form 121 is a new self-declaration form effective April 1, 2026, replacing Forms 15G and 15H. It allows individuals, including senior citizens, to avoid TDS on incomes such as interest or dividends if their estimated tax liability is zero.

Under the revised Income-tax framework, Form 121 replaces both Form 15G and Form 15H, eliminating the need for separate forms based on age.

Earlier:

Form 15G was applicable to individuals below 60
Form 15H was meant for senior citizens

Now:

A single Form 121 can be used by all eligible resident individuals and Hindu Undivided Families (HUFs)

The purpose remains unchanged—allow taxpayers to declare that their total income is below the taxable limit, ensuring that banks do not deduct TDS on interest income.

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Why this is crucial

Fixed deposits continue to be a preferred investment avenue due to their safety and predictable returns. However, TDS on interest income can quietly reduce actual earnings, especially when ignored at the start of the financial year.

Banks automatically deduct TDS once interest crosses prescribed limits. While investors can claim refunds later if their tax liability is nil, the bigger issue is timing—the deducted amount stops earning returns immediately.

Over time, this creates a drag on compounding, resulting in a lower maturity value.

TDS on compounding

The impact of TDS is not just about tax—it is about lost growth potential.

For example, consider a ₹10 lakh FD earning 7% annually:

Without TDS: The investment grows to around ₹27.6 lakh in 15 years
With 10% TDS deducted annually: The maturity value drops to about ₹25 lakh

This gap emerges because a portion of interest is removed every year, reducing the base for future compounding.

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Who should submit Form 121?

Form 121 can be submitted by:

Resident individuals and HUFs
Those whose total income is below the basic exemption limit
Those with zero tax liability for the financial year

The form requires details such as PAN, estimated income, and a declaration confirming eligibility.

Key things investors must get right

Despite simplification, compliance discipline remains critical:

Submit early: Ideally at the start of the financial year to avoid initial TDS deductions
Consider total income: Include interest from all FDs across banks
Submit to each bank separately: A single submission is not sufficient

Missing these steps can lead to unnecessary deductions or incorrect declarations.

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