Before April 1, 2026, individual taxpayers in India relied on Forms 15G and 15H to avoid Tax Deducted at Source (TDS) on interest income when their total income fell below the taxable limit. These forms were primarily available to individuals aged 60 and above, creating a barrier for younger taxpayers who also qualified for similar exemptions.
With the introduction of Form 121, this landscape is set to change dramatically. Form 121 replaces both Forms 15G and 15H, allowing all individual taxpayers, regardless of age, to request no TDS on certain types of income. This decisive moment in India’s tax policy reflects a broader initiative to simplify the tax system.
Form 121 is governed by Section 393(6) of the Income-tax Act, 2025, marking a shift from the previous governance under Section 197A of the Income-tax Act, 1961. This change not only modernizes the tax framework but also aligns it with contemporary financial practices.
One of the critical features of Form 121 is its self-declaration nature. Taxpayers can submit this form to ensure that no TDS is deducted before interest is credited, provided their total income remains below the taxable threshold. This is a significant improvement over the earlier forms, which had age restrictions and were less accessible.
Moreover, Hindu Undivided Families (HUFs) can also file Form 121 if they meet the necessary conditions, further broadening its applicability. However, it is important to note that companies and firms are still not eligible to use this form.
The introduction of Form 121 is part of a concerted effort to reduce complexity in tax compliance, making it easier for individuals to navigate their financial responsibilities. This simplification is expected to enhance compliance rates and reduce the administrative burden on both taxpayers and tax authorities.
As of now, the financial markets are responding positively to these changes, with the BSE Sensex trading at 73,215.15 and the Nifty 50 at 22,670.30, reflecting a 0.11% increase. The Indian rupee has also shown a 2% recovery against the US dollar, indicating a broader economic optimism.
Experts believe that this shift will not only streamline tax processes but also encourage more individuals to engage with the tax system, ultimately benefiting the economy. The move towards a more inclusive tax declaration process is seen as a step in the right direction.
Details remain unconfirmed regarding the long-term impacts of Form 121, but the immediate effects on individual taxpayers and the overall tax landscape in India are already becoming evident.
