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Form 121 under the Income-tax Act, 2025: Eligibility, Zero-TDS Rules, Examples and CA Compliance Guide
Tax Year 2026–27 | 28 October 2026
Form No. 121 is the unified declaration prescribed under Rule 211 of the Income-tax Rules, 2026, read with Section 393(6) of the Income-tax Act, 2025. It enables eligible taxpayers to receive specified categories of income without deduction of tax at source (TDS), subject to the statutory eligibility conditions.
Form 121 consolidates the earlier Forms 15G and 15H into a single declaration mechanism under the new tax framework. However, a nil tax liability alone does not establish eligibility. The nature of the income, the declarant's status, estimated total income and the applicable monetary-limit test must all be examined.
This guide explains the statutory framework, eligible income categories, illustrative tax computations, filing procedures, UIN requirements and a practical compliance checklist for taxpayers, deductors and Chartered Accountants.
Form 121 is a declaration furnished by an eligible recipient of specified income to request non-deduction of TDS on the relevant payment.
The declaration operates on the basis that the tax payable on the declarant's estimated total income for the relevant tax year will be nil and that the other applicable statutory conditions are satisfied.
The form has two parts:
Part A — Declarant's declaration: Contains the declarant's particulars, PAN, residential status, income details and the prescribed declaration.
Part B — Payer's reporting: Records the declarations received and enables the payer to comply with the applicable Unique Identification Number (UIN) and quarterly reporting requirements.
The payer must follow the prescribed procedure and cannot treat every declaration as an unconditional exemption from TDS.
2. Statutory framework
Particulars | Applicable provision |
|---|
Governing legislation | Income-tax Act, 2025 |
Declaration for non-deduction | Section 393(6) |
Payer's statutory obligation | Section 393(7) |
Prescribed declaration | Form No. 121 |
Relevant procedural rule | Rule 211, Income-tax Rules, 2026 |
Relevant TDS statement framework | Rule 219, subject to the applicable provisions |
The new framework applies to tax years beginning on or after 1 April 2026, subject to the applicable commencement and transitional provisions.
The earlier Forms 15G and 15H belonged to the Income-tax Act, 1961 framework. For transactions governed by the Income-tax Act, 2025, Form 121 is the relevant prescribed declaration.
Important: For transactions spanning the transition between the two Acts, verify the applicable statutory provisions and transitional rules rather than applying Form 121 retrospectively.
Form 121 is available only for specified categories of income and eligible declarants. It is not a general-purpose declaration for all payments that may ultimately result in nil tax.
The relevant categories include the following, subject to the applicable statutory conditions:
Income or payment category | Eligibility considerations |
|---|
Accumulated provident fund balance | Available to an eligible person other than a company or firm, subject to the applicable provident fund provisions |
Insurance commission | Subject to the statutory eligibility conditions for the relevant payment |
Rent | Must fall within the applicable rent-withholding provision |
Income from specified units | Subject to the relevant statutory provision governing income from units |
Interest on securities | Must satisfy the conditions for the specified interest category |
Other eligible interest, including bank and post-office interest | Subject to the applicable payment category, declarant status and eligibility tests |
Life insurance policy payments, including bonus | Subject to the relevant statutory conditions |
Dividends, including preference dividends | The dividend category is available to a resident individual, subject to the statutory conditions |
The applicable category determines who may submit the declaration. Several categories are available to a resident individual or another eligible resident person other than a company or firm. The dividend category is specifically available to a resident individual.
A taxpayer should not assume that eligibility for one income category automatically establishes eligibility for another.
Form 121 cannot be used to stop TDS on salary, professional fees, contractual receipts or any other payment that is not covered by Section 393(6).
4. Eligibility conditions
4.1 Nil-tax-liability test
The tax payable on the declarant's estimated total income for the relevant tax year, including the income covered by the declaration, must be nil.
The computation must take into account the applicable tax regime, tax rates, deductions, rebates and other relevant provisions.
The following are not sufficient by themselves:
Nil tax deducted previously.
Low income from a particular investment.
A claim that the income is covered by a rebate without computing total income.
A declaration that the taxpayer expects a refund.
4.2 Additional monetary-limit test
For persons who do not qualify for the senior-citizen exception, the aggregate specified income or sums covered by the declaration must not exceed the maximum amount not chargeable to tax, as prescribed under the applicable statutory framework.
This is a separate condition from the nil-tax-liability test.
4.3 Senior-citizen exception
A resident individual aged 60 or above at any time during the tax year is not subject to the additional monetary-limit test.
However, the requirement that tax on estimated total income must be nil continues to apply. The age-based relaxation does not authorise a declaration when the estimated tax liability is positive.
4.4 Residential status and eligible persons
The declarant must fall within the class of persons permitted to furnish Form 121 for the relevant payment category.
A non-resident, company or firm cannot assume that Form 121 is available merely because its estimated tax liability is nil. The relevant statutory category and exclusions must be checked before accepting or relying on the declaration.
5. Illustrative eligibility and tax-computation examples
The following examples demonstrate how the statutory tests operate. They are illustrations and not determinations of actual eligibility.
The monetary threshold and tax outcomes stated below are assumptions for explaining the principles. Before relying on these examples for Tax Year 2026–27, verify the applicable basic exemption limit, tax regime, tax rates, rebate provisions and final tax computation.
Example 1: Resident individual below 60 — eligible in principle
Assume a resident individual aged 45 has the following estimated income:
Particulars | Amount |
|---|
Other taxable income | ₹2,50,000 |
Eligible bank interest covered by Form 121 | ₹1,00,000 |
Estimated total income | ₹3,50,000 |
Assume that:
The applicable maximum amount not chargeable to tax is ₹4,00,000.
The final tax liability on total income of ₹3,50,000 is nil.
The bank interest qualifies for Form 121.
The tax liability is nil, and the specified income covered by the declaration is below the assumed monetary limit.
Conclusion: Form 121 may be furnished, provided all other statutory conditions are satisfied.
Example 2: Resident individual below 60 — nil tax alone is insufficient
Assume another resident individual aged 45 has the following estimated income:
Particulars | Amount |
|---|
Other taxable income | ₹7,00,000 |
Eligible bank interest covered by Form 121 | ₹4,25,000 |
Estimated total income | ₹11,25,000 |
Assume, solely for illustration, that the applicable tax computation results in nil tax liability after the relevant rebate, but the maximum amount not chargeable to tax remains ₹4,00,000.
The specified income covered by Form 121 is ₹4,25,000, which exceeds the assumed monetary limit.
Conclusion: The individual fails the additional monetary-limit test. Nil tax liability by itself does not make the declaration valid.
Example 3: Resident senior citizen — additional monetary-limit test does not apply
Assume a resident individual aged 65 has the following estimated income:
Particulars | Amount |
|---|
Other taxable income | ₹4,50,000 |
Eligible bank interest covered by Form 121 | ₹2,00,000 |
Estimated total income | ₹6,50,000 |
Assume the applicable tax computation results in nil tax liability.
The additional monetary-limit test does not apply to this resident senior citizen. The nil-tax-liability test and the other statutory conditions must still be satisfied.
Conclusion: Form 121 may be available for the eligible interest income, subject to verification of the actual tax computation and the relevant payment category.
Consider a salaried individual with gross annual salary of ₹11,65,000.
A tax computation may result in nil tax liability after applying the standard deduction and an eligible rebate under the applicable regime. That outcome does not make Form 121 available for salary.
Salary is not a specified payment category under Section 393(6).
If the same individual also receives eligible bank interest, the interest may be considered separately for Form 121 eligibility. However, salary must be included when computing the individual's estimated total income.
Conclusion: Form 121 cannot be used as a general declaration to the employer to stop salary TDS.
Practical approach to eligibility
Before accepting or advising on Form 121, follow this sequence:
Identify the precise income or payment category.
Confirm that the declarant is eligible for that category.
Estimate total income for the tax year, including the specified income.
Compute the final tax liability under the applicable regime.
Apply the additional monetary-limit test where required.
Document the assessment and furnish the declaration only if all applicable conditions are met.
A nil-tax computation is necessary, but it is not sufficient in every case.
The declarant should furnish Form 121 to the relevant payer before the income is credited or paid, preferably at the beginning of the tax year.
This allows the payer to verify and process the declaration before making the relevant payment or credit entry.
Rule 211 permits submission in the prescribed electronic or paper mode. The applicable verification and reporting procedures must be followed.
A separate declaration must be furnished to each payer from whom the declarant seeks the benefit of non-deduction of TDS.
If TDS has already been deducted before the declaration is received, the declaration does not automatically reverse the deduction. The taxpayer should examine the permissible correction procedure, where applicable, or claim the appropriate tax credit or refund through the relevant return process.
The Income Tax Department's e-Filing portal provides the prescribed electronic filing facility for Form 121.
Step 1 — Log in
Visit the official Income Tax e-Filing portal:
https://www.incometax.gov.in/
Log in using the deductor's TAN credentials. Ensure that the TAN is valid and the account is registered.
Step 2 — Open Form 121
Navigate to:
e-File → Income Tax Forms → File Income Tax Forms
Select the relevant Form 121 service and choose the applicable filing type, tax year and quarter.
Step 3 — Enter the payer's particulars
Verify the prefilled name, address and contact details. Enter the payer's PAN wherever required and save the section.
Step 4 — Upload the declaration particulars
Download the official instruction sheet and spreadsheet template. Populate the prescribed fields and create the required CSV file.
Upload the CSV file and review the portal's validation results. If an error file is generated, correct the reported errors and upload the revised file.
Step 5 — Complete the declaration and verification
Confirm the declaration, enter the required place details, preview the form and complete the prescribed e-verification process.
Step 6 — Retain filing evidence
Record the acknowledgement number and transaction ID. Verify the filed form under:
e-File → Income Tax Forms → View Filed Forms
Retain the acknowledgement and supporting records for future reference.
The exact menu labels and upload procedure should be checked against the live portal before filing because electronic interfaces and instructions may change.
The declarant's submission and the payer's reporting are separate compliance obligations.
Event | Responsible person | Timeline |
|---|
Furnish Part A | Declarant | Before credit or payment, preferably at the beginning of the tax year |
Verify and process declaration | Payer | On receipt |
Allot UIN | Payer | For each declaration received |
Furnish Part B | Payer | On or before the seventh day of the month following the relevant quarter |
File quarterly TDS statement | Payer | Within the applicable statutory due date |
The Part B reporting obligation under Rule 211 must be distinguished from the quarterly TDS statement obligation under the applicable provisions, including Rule 219 and the relevant CBDT Systems notification.
Tax Year 2026–27: Part B reporting calendar
Quarter | Period | Part B deadline |
|---|
Q1 | 1 April – 30 June 2026 | 7 July 2026 |
Q2 | 1 July – 30 September 2026 | 7 October 2026 |
Q3 | 1 October – 31 December 2026 | 7 January 2027 |
Q4 | 1 January – 31 March 2027 | 7 April 2027 |
These dates reflect the prescribed seventh-day reporting cycle. Check the applicable statutory provisions and any official extensions before filing. Do not assume that a deadline automatically shifts when it falls on a non-working day.
The quarterly TDS statement has its own prescribed deadline and must not be confused with the Part B deadline.
Under Rule 211, the payer must allot a UIN to each declaration received. The UIN identifies the declaration within the prescribed reporting framework; it is distinct from the declarant's PAN.
The prescribed UIN consists of 26 characters, structured as follows:
Component | Length | Illustration |
|---|
Running serial number | 10 characters | D000000001
|
Tax-year identifier | 6 digits | 202627
|
Payer's TAN | 10 characters | MUMN12345A
|
Total | 26 characters | D000000001202627MUMN12345A
|
The running serial number begins with the letter D, followed by nine numerical digits. The serial sequence resets at the beginning of each tax year for each TAN.
The example illustrates the prescribed structure; it is not a representation of an actually allotted UIN.
Payer's UIN compliance responsibilities
The payer should:
Obtain a separate Form 121 from each declarant for the relevant payer relationship.
Allot a distinct UIN to each declaration received.
Maintain the declaration register and supporting records.
Digitise paper declarations where required by the prescribed procedure.
Furnish Part B within the applicable quarterly deadline.
Include the required declaration particulars and UINs in the quarterly TDS statement under the applicable rules.
Reconcile declarations received, UINs allotted, Part B filings and quarterly TDS statements.
Retain filing acknowledgements and records, including where no TDS has been deducted.
The payer must follow the current official instructions for UIN generation, CSV validation and electronic filing.
10. Chartered Accountant's compliance checklist
A CA firm can use the following checklist when advising declarants or reviewing a deductor's Form 121 process.
A. Declarant eligibility
Confirm that the declarant's PAN is valid and operative.
Verify residential status and legal status.
Confirm that the payment category is covered by Section 393(6).
Estimate total income and compute the final tax liability.
Apply the additional monetary-limit test where required.
Verify age and retain supporting evidence where the senior-citizen exception is claimed.
B. Declaration intake
Obtain a complete Part A declaration before credit or payment wherever possible.
Check the declared income and estimated total income for consistency.
Consider declarations submitted to other payers and aggregate amounts where relevant to the statutory test.
Record the date and mode of receipt.
Obtain supporting bank, investment or payment particulars where appropriate.
C. Payer and reporting compliance
Confirm TAN registration and portal access.
Verify each declaration and allot a UIN.
Maintain the declaration register and supporting documents.
Prepare and validate the prescribed CSV or template data.
Furnish Part B within the applicable deadline.
Reconcile Form 121 declarations and UINs with the quarterly TDS statement.
D. Evidence and review
Retain the acknowledgement, transaction ID and filing evidence.
Investigate portal validation errors and preserve corrected-file records.
Document reviewer approval and exceptions.
Reassess the declaration where subsequent information indicates that the original estimated tax position may no longer be reliable.
This checklist is an internal control aid. It does not replace the prescribed form, statutory requirements or the payer's responsibility for accurate reporting.
11. Common mistakes to avoid
Treating Form 121 as a universal zero-TDS declaration: It applies only to specified income categories.
Considering only the income covered by the declaration: The nil-tax test relates to estimated total income.
Ignoring the monetary-limit test: It remains a separate condition for persons who do not qualify for the senior-citizen exception.
Accepting a declaration without checking eligibility: Verify the declarant's status and the applicable income category.
Assuming that a nil-tax rebate automatically permits Form 121: The rebate does not remove the other eligibility conditions.
Confusing Part B with the quarterly TDS statement: These are separate reporting obligations.
Using an incorrect UIN format: Follow the prescribed 10-character serial, six-digit tax-year identifier and 10-character TAN structure.
Assuming that a previous year's declaration remains valid: Eligibility and declaration requirements must be examined for each relevant tax year.
Assuming that Form 121 eliminates the requirement to file an income-tax return: Return-filing obligations are determined separately.
12. Frequently asked questions
Yes. Form 121 consolidates the earlier declarations under the Income-tax Act, 1961 framework into a single form under Section 393(6) of the Income-tax Act, 2025 and Rule 211 of the Income-tax Rules, 2026, for the tax years governed by the new framework.
Not to obtain non-deduction of TDS on salary. Salary is not a specified payment category under Section 393(6). However, the person may separately qualify for Form 121 for eligible interest or another covered payment.
Potentially. The payment category, declarant's status and the additional monetary-limit test, where applicable, must also be satisfied.
A resident individual aged 60 or above at any time during the tax year is not subject to the additional monetary-limit test. However, tax on estimated total income must still be nil, and all other statutory conditions must be satisfied.
Q5. Is a separate UIN required for each declaration?
Yes. The payer must allot a UIN to each declaration received. The UIN comprises a 10-character running serial number beginning with D, a six-digit tax-year identifier and the payer's 10-character TAN.
Q6. What is the deadline for Part B?
Part B must be furnished on or before the seventh day of the month following the quarter in which the declaration is furnished to the payer, subject to the applicable statutory requirements and official extensions.
No. Form 121 concerns TDS on specified payments. Whether an income-tax return must be filed depends on the applicable return-filing provisions and the taxpayer's circumstances.
Conclusion
Form 121 is an important development in the TDS framework under the Income-tax Act, 2025. It consolidates the earlier Forms 15G and 15H and establishes a common declaration mechanism for eligible recipients of specified income.
For taxpayers, the priority is to assess eligibility correctly by considering the income category, residential and legal status, estimated total income and applicable tax liability.
For deductors, compliance extends beyond receiving a declaration. It includes verification, UIN allocation, Part B reporting, quarterly TDS statement reconciliation and proper record retention.
For Chartered Accountants, the best practice is to document the eligibility assessment, verify the relevant statutory provisions, check the tax computation and maintain a complete audit trail.
The governing principle is clear: a nil-tax outcome does not automatically authorise non-deduction of TDS. Form 121 can be relied upon only when all applicable statutory conditions are satisfied.
Official references and further reading
Section 393(6), Income-tax Act, 2025:
https://www.incometaxindia.gov.in/w/section-393-6
Rule 211, Income-tax Rules, 2026:
https://www.incometaxindia.gov.in/w/rule-211-1
Form 121 Guidance Note:
https://www.incometaxindia.gov.in/documents/20117/16320689/FN-121.pdf/1961003d-292e-8475-5224-8fd81611f035
Form 121 User Manual:
https://www.incometax.gov.in/iec/foportal/newformpage/forms/from121-um
CBDT Systems Notification No. 01/CPC(TDS)/2026:
https://www.incometax.gov.in/iec/foportal/sites/default/files/2026-04/Notification-No-01-CPC-TDS-2026.pdf
Official Form 121 FAQs:
https://www.incometaxindia.gov.in/documents/d/guest/form-121-faqs
Editorial note: This article is intended for general educational purposes. The illustrative examples use assumed figures and tax outcomes. Before publication or practical application, verify the applicable tax rates, exemption thresholds, rebates, statutory amendments, portal instructions and official clarifications for Tax Year 2026–27.
