TDS is deducted across many incomes including, bank interest, dividends, even rent.
But it often continues even when the income isn’t actually taxable. And the only way to get that money back is to file your ITR and then wait months for a refund.
This is what Form 121 is meant to address.
What is Form 121?
Form 121 is a self-declaration you can submit to prevent TDS from being deducted on incomes like bank interest, dividends, rent, or pension.
By filing it, you’re essentially informing the payer that your income falls below the taxable limit, so tax shouldn’t be deducted on your income in the first place.
This helps you avoid unnecessary TDS deductions and the long wait for refunds. So who is this actually useful for?
Who should file it?
Form 121 is meant for resident individuals whose total income for the Tax Year is below the basic exemption limit and whose final tax liability comes down to zero after deductions and rebates.
When you’re checking whether you qualify, you need to look at your total income holistically. This includes salary or pension, income from house property, business or professional income, capital gains, and income from other sources like interest and dividends.
At the same time, certain incomes are excluded from this calculation like agricultural income, PPF interest, and the exempt portion of HRA.
What incomes does it cover?
Form 121 brings multiple income types under one umbrella. It can be used for interest earned from banks, post offices, or securities, dividends from shares or mutual funds, and even rent in certain cases where the tenant is a business or where monthly rent exceeds ₹50,000. It also extends to insurance commission and payouts from life insurance policies.
When should you submit it?
You should submit Form 121 at the beginning of the tax year – ideally in April or at the very least, before your first interest or dividend is credited. This ensures TDS isn’t deducted from the start.
The form needs to be submitted to the person or institution making the payment. This could be your bank, insurer, or any other deductor. And since it’s not a one-time exercise, you’ll need to submit it each Tax Year to keep it valid.
Here’s the Form 121 attached below so you can get a head start on what the new format looks like.
Form 121.pdf (453.9 KB)
Questions? Let’s sort them out.