Form 121 eligibility for non deduction of TDS for Interest Payments

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Ravi Chandra

Employee

32 Points Posted on 04 July 2026

I have no other income except Interest earned on deposits made in a Bank. The Approximate Interest will be Rs.8.00 Lacs for the FY 2026-2027 (hence my total income for the year will be Rs.8.00 Lacs only). Can i Submit form 121 to bank for not to deduct TDS as my income would not attract any tax under new tax regime, As In new tax regime tax is nill for income upto 12,00,000.00 with tax rebate.

Replies (3)

Quick Summary

A taxpayer asked whether Form 121 can be submitted to avoid TDS on bank interest of Rs. 8 lakh when tax is nil under the new regime due to rebate. The discussion focused on Form 121 eligibility, TDS rules, and claiming a refund through the ITR if TDS is deducted.

Aashok Kumar Sharma

Finance/Compliance Consultant

77162 Points Posted on 04 July 2026

Summary: Form 121 is the new unified declaration (replacing 15G/15H) that you can use to avoid TDS on interest income if your total tax liability for the year is nil. If your calculation confirms your tax liability is zero, you are eligible to submit it to your bank.

Tax Garden

Tax Consultant

2084 Points Posted on 07 July 2026

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.

Rushabh

Automation Expert

4436 Points Posted on 13 November 2026

Form 121 may be submitted only if you satisfy its eligibility conditions; income below the new-regime tax threshold, by itself, may not be sufficient. For FY 2026–27, the stated ₹8 lakh interest income is below ₹12 lakh, but the rebate is subject to the applicable rules and your eligibility. Also check the form’s age and income limits and whether you have any other income or tax liability relevant to the declaration. If accepted, the declaration is for avoiding TDS; it does not replace filing a return if one is otherwise required.

For bank-interest TDS, the practical workflow is to verify the declaration conditions and submit the prescribed form to the bank. Manual tracking across deposits and tax-year thresholds is difficult; automation can reduce repetitive work while keeping the professional in control of checks and decisions. Our platform offers 2,000+ AI agents and 650+ integrations across relevant tax, accounting and compliance workflows. For details on streamlining this workflow, connect with us on WhatsApp at https://wa.me/message/3HVOZ7HIY4ESC1.