Until now, senior citizens relied on Form 15H to declare that their income was below the taxable limit and to prevent TDS on interest income. However, starting FY 2026-27, Form 121 will replace both Form 15H and Form 15G, creating a unified declaration system for all individuals, regardless of age.
Senior citizens can submit Form 121 only if their total tax liability is nil and their income falls below the basic exemption limit.
From April 1, 2026, a host of income tax changes will come into effect under the new Income Tax Act, 2025. Among these, the introduction of Form 121 stands out as a key reform for senior citizens, aimed at simplifying the process of avoiding Tax Deducted at Source (TDS) on income below the taxable threshold.
Form 121 replaces Form 15H
Until now, senior citizens relied on Form 15H to declare that their income was below the taxable limit and to prevent TDS on interest income. However, starting FY 2026-27, Form 121 will replace both Form 15H and Form 15G, creating a unified declaration system for all individuals, regardless of age.
This change removes the need for separate forms based on age criteria and simplifies compliance, particularly for retirees who often depend on interest income and pensions.
What is Form 121
Form 121 is a self-declaration form that allows individuals to state that their total income is below the basic exemption limit, thereby ensuring that no TDS is deducted on specified income. For senior citizens, this is especially useful as a large portion of their earnings comes from fixed deposits, savings schemes, and other interest-bearing instruments.
The form must be submitted to each payer—such as banks or financial institutions—before the income is credited. Once submitted, the payer will not deduct TDS on eligible payments.
Mandatory PAN and compliance requirements
Under the new rules, quoting Permanent Account Number (PAN) is compulsory while submitting Form 121. If PAN is not provided, the declaration becomes invalid, and TDS may be deducted at higher rates.
Additionally, the compliance framework has been strengthened. Every Form 121 submitted will be assigned a Unique Identification Number (UIN)—a 26-character code generated by the payer. This UIN must be reported to the tax authorities, even in cases where no tax is deducted, ensuring better tracking and transparency.
Payers are also required to complete and submit Part B of the form and include these details in their periodic TDS filings.
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Income covered under Form 121
The scope of Form 121 is broad and continues to cover key income sources relevant to senior citizens. These include:
Interest income from bank deposits and fixed deposits
Pension payments
Provident fund withdrawals
Dividend income
Income from mutual funds
Insurance payouts
Rental income
This ensures that senior citizens can avoid unnecessary TDS deductions across multiple income streams, maintaining better liquidity.
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When can senior citizens use Form 121
Senior citizens can submit Form 121 only if their total tax liability is nil and their income falls below the basic exemption limit. In such cases, submitting the form ensures that no tax is deducted at source, eliminating the need to claim refunds later.
For retirees and pensioners, this is particularly important as it helps maintain steady cash flows without waiting for tax refunds.
Simpler tax compliance
The introduction of Form 121 reflects the government’s broader push to simplify tax processes and improve compliance through standardisation and digital tracking. By replacing multiple forms with a single declaration and introducing UIN-based reporting, the system becomes more transparent and efficient.
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For senior citizens, this reform not only reduces paperwork but also ensures smoother financial management, making it one of the most practical and impactful changes in the new tax regime.
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