Form 121 eligibility for non deduction of TDS for Interest Payments

Form 121 (self-declaration of non-deduction) only works when your total income is BELOW the basic exemption limit (Rs 3 lakh under new regime). It is not valid just because your final tax liability comes to zero after the Section 87A rebate.

With Rs 8 lakh interest income, you are above the Rs 3 lakh basic exemption threshold, so banks are legally required to deduct TDS. The Section 87A rebate reduces your tax to zero but does not affect the bank's TDS obligation at source.

What you can do:
- File your ITR-2 for AY 2026-27 declaring the interest income, compute your final tax (zero after Section 87A), and claim a full refund of the TDS deducted
- If you are a senior citizen (age 60+) with total income below Rs 5 lakh and no business income, Form 15H is the correct self-declaration form ,  not Form 121
- For non-senior-citizens, there is no valid self-declaration to stop TDS when income exceeds the basic exemption, even if final tax is zero

The refund route is straightforward: e-file the ITR, the refund processes within 20-40 days after verification.

For help filing ITR-2 with interest income and TDS refund claims, Tax Garden's [TDS filing service](https://taxgarden.in/tds-filing) covers Form 26AS reconciliation and accurate TDS refund claims.