Form 121 Rejected or TDS Still Cut? The 5 Mistakes That Void Your Declaration

Ramesh, 58, holds fixed deposits in three banks. Every April he filed Form 15G with all three and no TDS was cut. This April he did the same — and in July he found 10% TDS on his interest anyway. Nothing about his income had changed. What changed was the form: from 1 April 2026, Forms 15G and 15H no longer exist for new declarations. His banks were right to ignore them. This guide covers the Form 121 rules that actually apply now, the five mistakes that void a declaration, and what to do when TDS has already been cut. For the interest thresholds behind all of this, read the TDS-on-interest thresholds guide first.

What Form 121 replaced — and why old forms now fail

Form 121 is a self-declaration given to the payer — bank, post office, company or other deductor — stating that your estimated tax liability for the tax year is nil, so tax should not be deducted at source on the specified income. It operates under Section 393(6) of the Income-tax Act, 2025, read with Rule 211 of the Income-tax Rules, 2026. For tax year 2026-27 onwards it replaces both Form 15G (previously for resident individuals below 60, HUFs and others) and Form 15H (previously for resident senior citizens aged 60 or more) under the old Section 197A. The age-based split is gone: one form captures age and eligibility details together.

The practical consequence is blunt. If you submitted 15G or 15H for FY 2025-26, that declaration is dead for the current year. Institutions are required to reject the old forms from 1 April 2026 and deduct TDS. “But I filed it in April” is not a defence if the form you filed no longer exists. If you are still holding a 15G/15H printout, file Form 121 instead — separately with each payer.

The eligibility tests — both must pass (except for seniors)

For resident individuals below 60 and other eligible non-company, non-firm persons, two conditions must hold at the same time:

1. Tax on your estimated total income for the tax year is nil — after all deductions under the regime you will actually use. Not “my interest is small”, but “my total tax, from every source, is zero.”
2. The aggregate specified income in the declaration does not exceed the maximum amount not chargeable to tax — ₹4,00,000 under the new regime for tax year 2026-27.

Here is the catch that voids the most declarations: the two tests are independent. A taxpayer with ₹1,20,000 of FD interest but salary income that pushes total tax above nil cannot file Form 121, even though the interest alone is well within the exemption limit. Conversely, a person with nil total tax but ₹5,00,000 of declared interest fails test two. Either failure makes the declaration invalid, and the payer must deduct.

For resident senior citizens (60 or more), only the first test applies — there is no specified-income cap. That single-condition relaxation is the old 15H advantage, preserved inside Form 121. Senior citizens should still note the TDS thresholds themselves: banks deduct TDS on deposit interest only above ₹50,000 a year for others and ₹1,00,000 for senior citizens — below those thresholds, no declaration is needed at all, because no TDS is due in the first place.

The 5 mistakes that void a declaration

1. Filing the old form. 15G/15H for tax year 2026-27 onwards: rejected, TDS deducted. File Form 121.
2. Filing after the income is credited. The declaration must reach the payer before the interest is paid or credited. If your FD credits interest on 5 April and you file on 10 April, that quarter’s TDS is already gone — you claim it back in your ITR, not from the bank.
3. Filing with only one bank. Each payer is independent. FDs in three banks need three separate Form 121 submissions. The bank that never received one deducts, correctly.
4. An inoperative or missing PAN. Without a valid, operative PAN on record, TDS is deducted at 20% instead of 10% — and a declaration without a valid PAN will not be honoured. Check PAN status before blaming the bank.
5. Not renewing every year. A declaration covers one tax year only. Last April’s Form 121 does not protect this April’s interest. Renew at the start of every financial year, before any income is credited.

If TDS was already cut — the fix path

First, check whether the deduction even appears where it should: open your AIS and Form 26AS and confirm the entry, then read what to do when TDS is deducted but missing from 26AS/AIS. If the TDS is correctly recorded, the recovery route is your income tax return — claim the full TDS as a credit against your total tax; if your total tax is nil, the excess comes back as a refund. Do not ask the bank to “reverse” TDS it was legally required to deduct. If the TDS does not appear in 26AS at all, the fix runs through the deductor: only the deductor can file a correction statement on TRACES. And if your salary TDS is also running high for a different reason, the Form 12BB and regime-declaration fix for salary TDS covers that separate problem. For the full map of TDS topics, see the TDS hub.

Worked example: three banks, one missed form

Ramesh’s FD interest for the year is ₹90,000 — ₹30,000 each from three banks — and his total income, after deductions, leaves his tax at nil. He files Form 121 with two banks in the first week of April but forgets the third. The two banks pay gross; the third, correctly, deducts 10% once interest crosses the threshold — ₹3,000. He has not lost ₹3,000: he claims it as a TDS credit in his ITR and, his tax being nil, receives it as a refund. What he has lost is time — a refund cycle that a five-minute form in April would have avoided. That is the real cost of a missed declaration: not the money, but the months waiting for it.

FAQs

Is Form 15G still valid in 2026?
No — for tax year 2026-27 onwards, Forms 15G and 15H are replaced by the single Form 121. Old forms submitted for the current year are liable to be rejected and TDS deducted.

Can I file Form 121 if I have salary income?
Only if your estimated total tax for the year, from all sources including salary, is nil — and, if you are below 60, the specified income in the declaration stays within the maximum amount not chargeable to tax (₹4,00,000 under the new regime for tax year 2026-27).

Do I need a separate form for each bank?
Yes. The declaration goes to each payer separately. One bank’s acceptance does nothing for your deposits elsewhere.

What if my PAN is inoperative?
TDS is deducted at 20% instead of 10%, and your declaration may not be honoured. Get the PAN operative first, then file.

Can the bank refund TDS it already deducted?
No. Once correctly deducted and deposited, TDS is recovered only as a credit in your income tax return, refunded if your total tax is nil.

Sources

Income-tax Act, 2025, Section 393(6), read with Rule 211 of the Income-tax Rules, 2026 — Form 121 as the single TDS non-deduction declaration from tax year 2026-27, replacing Forms 15G and 15H under the former Section 197A of the Income-tax Act, 1961. Bank deposit-interest TDS thresholds (₹50,000 general; ₹1,00,000 senior citizens) and 10%/20% TDS rates (20% without a valid PAN) per the Section 393 table (former Section 194A) and the no-PAN provision in Section 397(2) of the Income-tax Act, 2025 (former Section 206AA).