Form 121 & TDS deduction

This query is : Resolved

Quick Summary

If Form 121 is submitted before deduction, bank may reverse TDS before deposit as per internal process. After remittance, bank cannot refund directly; taxpayer must claim refund in ITR or via revised TDS return if applicable.

Kawai

Kawai (Querist)
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26 April 2026 Can a Bank refuse to reverse TDS deducted, after submission of form 121, during the month, before it is consolidated and remitted to the Income Tax Deptt? Form 121 was submitted before TDS was deducted that day.
Even if Form 121 is submitted after TDS has been remitted, can't the Bank refund the TDS by filing a revised return?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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26 April 2026 Once TDS has been deducted and remitted to the Income Tax Department, the bank generally cannot directly refund the TDS to the customer. Form 121 is a declaration for non-deduction of TDS on future/eligible payments where estimated tax liability is nil; it does not by itself reverse tax already deducted and deposited.

If Form 121 was submitted before deduction and the bank deducted TDS due to a processing/system error, the assessee may request the bank to examine whether correction/revision of the TDS statement is possible. However, if the TDS has already been validly deposited and reflected against the PAN, the practical remedy is to claim the TDS credit/refund through the Income Tax Return.

Therefore, the bank may refuse direct refund after remittance, but the taxpayer will not lose the amount if the same is appearing in Form 26AS/AIS and is claimed in ITR.

Kawai

Kawai (Querist)
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26 April 2026 I understand, but in my case, the bank is yet to deposit Tax in the Income Tax Department account.

Kawai

Kawai (Querist)
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27 April 2026 Can I get help to my above query?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 April 2026 Before deposit, reversal/refund by the bank should be possible subject to their internal process. After deposit, refund is generally claimed through ITR rather than direct bank refund.

Kawai

Kawai (Querist)
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03 May 2026 Thanks. The revised TDS option is also there.

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