Overview
Fixed Deposits (FDs) remain one of the most popular investment options in India due to their safety and guaranteed returns. However, interest earned on Fixed Deposits is taxable, and banks deduct Tax Deducted at Source (TDS) when the interest crosses certain limits.
From April 1, 2026, the new Form 121 replaces Forms 15G and 15H to simplify TDS exemption on Fixed Deposit (FD) interest. It is a single, PAN-based, age-neutral declaration filed annually, allowing taxpayers to avoid TDS if their total interest income is under the threshold (₹50,000-₹1 lakh) or total annual income is below the taxable limit.
For the 2026-27 financial year, Form 121 is a new unified self-declaration form proposed to replace the existing Form 15G and Form 15H. It allows eligible taxpayers to request banks not to deduct Tax Deducted at Source (TDS) on their Fixed Deposit (FD) interest if their total tax liability for the year is zero.
What is Form 121?
Form 121 is a proposed declaration form that allows taxpayers to inform the deductor about:
- Their overall income position
- Available deductions
- Expected tax liability
This helps banks or financial institutions deduct TDS more accurately, instead of applying the standard deduction rate.
Key Features of Form 121
- Unified & Age-Neutral: Unlike the previous system where Form 15G was for individuals under 60 and Form 15H was for senior citizens, Form 121 is designed to be a single, age-neutral form for all eligible residents.
- Purpose: It serves as a declaration that your total annual income is below the taxable limit, instructing the bank to pay your full interest without any tax cuts.
- Mandatory PAN: A valid PAN must be linked to your bank account to use this form. Without a PAN, banks will deduct TDS at a higher rate of 20% regardless of the declaration.
How Form 121 Helps Save Tax?
Submitting Form 121 allows banks to:
- Consider total taxable income before deducting TDS
- Reduce unnecessary tax deduction on FD interest
- Improve taxpayer cash flow
- Reduce dependency on refunds while filing ITR
Difference Between Form 121 and Form 15G/15H
| Feature | Form 121 | Form 15G | Form 15H |
| Who can submit | Individuals with deductions | Individuals below 60 | Senior citizens |
| Purpose | Adjust TDS based on total income | Avoid TDS if income below limit | Avoid TDS for seniors |
| Income reporting | Detailed | Limited | Limited |
FAQs
What is Form 121 in income tax?
Form 121 is a declaration form intended to help deductors calculate accurate TDS based on the taxpayer’s overall income and deductions.
Can Form 121 stop TDS on FD interest?
It may reduce or adjust TDS, depending on the taxpayer’s final tax liability.
Is FD interest taxable even if TDS is not deducted?
Yes. FD interest must always be reported in the income tax return.
What is the TDS limit for FD interest in 2026?
₹50,000 for regular individuals and ₹1,00,000 for senior citizens.
Can Form 15G or 15H still be used?
Yes. These forms continue to be used where total income is below the taxable limit.
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