Money & Tax · Part 2 · Tax · 10 min read · August 2026

Form 15G and 15H are gone. Form 121 is what stops TDS on your FD now.

Every April a particular kind of queue forms at a bank counter — retired people, mostly, holding a photocopy of a PAN card and a form they have filled in the same way for fifteen years. This April the form had a different number on it. Nobody sent them a letter about it, and a fair share of the declarations we received in the first weeks were on paper that no longer exists.

Before any of the form-number business matters, it helps to be clear about what the bank is actually doing when it shaves 10% off your interest — because the single most common belief at the counter is wrong, and it is the belief that makes people angry.

What TDS on interest actually is

When a bank credits interest on a fixed or recurring deposit, it is required to withhold tax at source and pay it to the government against your PAN. Until this year that requirement sat in Section 194A of the Income-tax Act, 1961. From 1 April 2026 the same rule lives inside Section 393(1) of the Income-tax Act, 2025. The section number changed; the rate and the thresholds did not.

The rate is 10% where a valid PAN is on record, and 20% where it is not. And that second number is not a penalty in the punitive sense — it is simply what the law requires when the deductor cannot attach the deduction to a person. It is also, in my experience, the single largest avoidable loss on this whole subject. A deposit opened years ago in a branch that never updated the PAN, an account where the PAN has been deactivated for want of Aadhaar linkage — the interest is the same, the deduction is double.

The threshold, and the part people get wrong about it

The bank is not supposed to deduct anything until your interest for the financial year crosses a floor:

These figures were lifted from ₹40,000 and ₹50,000 with effect from 1 April 2025, and they continue unchanged for the current year. Plenty of finance content online still quotes the old numbers, which is worth knowing when you are checking your own position against something you read.

Now the part that surprises people. The threshold is not per deposit. It is the total interest credited or accrued across every deposit you hold with that bank under your PAN, added up for the year. Splitting ₹15 lakh into five FDs of ₹3 lakh each at the same bank achieves nothing at all — the system aggregates them at PAN level before it tests the limit. What does change the arithmetic is holding deposits at genuinely different banks, because the threshold is applied by each bank separately. That is a real effect, not a loophole, but it does not reduce your tax by a rupee. It only changes whether tax is collected now or at filing.

Two more boundaries worth knowing. Interest on an ordinary savings bank account is outside this deduction entirely — the bank withholds nothing on it, no matter how large, though the interest is still your income and still has to be declared. And recurring deposits are inside it, which catches people who assume the rule is an FD rule.

What changed on 1 April 2026

For decades the declaration came in two flavours. Form 15G for people below 60, Form 15H for senior citizens. Same purpose, different paper, and a steady trickle of people handing in the wrong one because the difference was never explained to them.

The Income-tax Act, 2025 took effect from 1 April 2026 and, among a great many renumberings, merged the two. There is now one declaration — Form 121 — made under Section 393(6) of the new Act, read with Rule 211 of the Income-tax Rules, 2026. It is age-neutral on its face: the same form whether you are 34 or 74.

The UIN change is quietly the most useful thing in the whole reform. Under the old system every payer generated its own unique number for every declaration it received, so a person with deposits at three banks and a dividend-paying holding produced four unrelated reference numbers under one PAN. Now a single identification number attaches to the taxpayer for the year and every declaration links back to it, with payers able to pull it from the department's portal. From the deductor's side it removes most of the duplication that used to make reconciliation miserable. From yours it means the declarations you file are visible as one set rather than four disconnected pieces of paper.

What has not changed is that you file separately with each payer. Form 121 is not a central registration. Deposits with two banks means two declarations, submitted to each bank, before the interest is credited.

The double lock, and who it catches

This is the part worth reading twice, because it is where the honest mistakes happen.

If you are 60 or above, the test is single: your estimated total tax for the year, after every deduction and rebate you are entitled to, must come to nil. That is it. Your income can comfortably exceed the basic exemption limit — as long as the final tax works out to zero, the declaration is good. This is the relaxation senior citizens have always had, and it survived the rewrite.

If you are below 60, or filing as a HUF, two conditions must both hold:

1. Your estimated total tax for the year is nil; and
2. The aggregate of the income covered by the declaration — across all payers combined, not just this bank — does not exceed the basic exemption limit for the year.

The basic exemption limit is ₹4,00,000 under the new regime, which is the default, and ₹2,50,000 under the old one. Note what that second condition does not care about: the rebate. The rebate is what makes taxable income up to ₹12 lakh attract nil tax under the new regime, and it satisfies condition one beautifully. It does nothing whatsoever for condition two.

So take two people who both owe zero tax this year.

A 44-year-old with ₹9 lakh of interest income and nothing else pays no tax, because the rebate wipes it out. She still cannot file Form 121, because ₹9 lakh of covered income is well past ₹4 lakh. Her bank is obliged to deduct, and her route is to claim the refund when she files.

A 67-year-old with the same ₹9 lakh of interest income also pays no tax — and he can file, because the aggregate ceiling does not apply to him at all.

Same income, same nil liability, opposite outcomes, decided entirely by age. I have had this conversation across the counter more than once, and it never sounds fair the first time. It is, however, exactly how the conditions are drafted, and a deductor is not permitted to accept a declaration that fails them. If your own case sits near the line, the notes printed on the current form are what govern — read them, or ask the branch to read them with you, because forms of this kind get revised.

What the declaration covers, and what it cannot

Form 121 reaches interest on bank and post office deposits, dividends from domestic companies, income from mutual fund units, rent from specified payers, insurance commission, certain life insurance payouts and accumulated provident fund balances on withdrawal.

It does not reach salary, and it does not reach capital gains. That second point has a sting in it: while gains are not covered by the declaration, they very much count towards the nil-tax test. Sell an equity holding at a profit in March and a declaration you filed honestly in April can be false by the end of the year. Anyone with lumpy capital gains should estimate for the whole year before signing, not for the position on the day.

PAN is mandatory. A declaration without a valid, operative PAN is not a valid declaration, and the payer must deduct — at the higher rate — regardless of what you have submitted.

Timing, and why April is the answer

A declaration stops deduction going forward. It cannot undo one already made. Most banks credit deposit interest quarterly, so a form handed in during September protects the credits still to come and does nothing for the two that have already gone.

File in the first fortnight of April, every year, for every payer. It is a small piece of household admin that most people discover the hard way, usually in January, looking at a statement.

If the deduction has already happened, the bank cannot reverse it — that money has left for the government against your PAN, and no branch has the power to pull it back. It will appear in your Form 26AS and your Annual Information Statement, and you claim it as a refund when you file your return. Which is not a disaster. It is just your money, immobilised for the better part of a year, for want of a form filled in on time.

Sign it as a statement of fact

Form 121 is a declaration about a future year, and people treat it a little casually because of that — a guess, made in April, about how the year will go. It is worth resisting that framing. A knowingly false declaration is prosecutable under the new Act, and the enforcement architecture is considerably tighter than it used to be: declarations are assigned a UIN, reported by payers monthly, and disclosed again in quarterly TDS statements, all matched against the return you eventually file.

None of which should worry anyone making an honest estimate that later turns out wrong — incomes move, and the law expects an estimate, not clairvoyance. If your position changes mid-year, tell the payer, let the deduction resume, and settle it at filing. The exposure lies in signing a declaration you knew at the time was not true.

The April checklist

• Add up expected interest, per bank, for the whole year — every deposit under your PAN at that bank, not each one separately.
• Below the threshold at a bank? Nothing to do there.
• Above it, work out your estimated tax for the year including capital gains. Nil? Continue.
• Under 60: check the second lock — does covered income across all payers stay within the basic exemption limit? If not, the declaration is not available to you, and the refund route is the correct one.
• Confirm your PAN is valid and operative at every payer, and that the bank has it against every deposit.
• File Form 121 with each payer separately, early in April, and keep the acknowledgement and UIN.
• Whether or not you filed, check Form 26AS and the AIS before you file your return, so nothing withheld goes unclaimed.

The thing worth carrying away

Almost all of the pain around TDS on deposits comes from treating it as a tax. It is not. It is a timing mechanism — the government collecting early against a bill that gets settled later. Form 121 does not save you tax and was never meant to. All it does is stop money leaving your hands eleven months before you can ask for it back.

For depositors whose income sits at the other end of the scale, the more interesting question is not how to avoid the deduction but where to hold the money in the first place. Part 1 of this series works that through with numbers — because once FDs and debt funds are both taxed at slab, the difference that remains is when the tax falls, which is the same idea running underneath everything on this page.

Written at the MoneyClarityTech desk — by a working retail-credit professional in Indian banking who reads loan files, credit reports and bank statements every working day. Patterns from hundreds of real cases; every identifying detail removed. More about MoneyClarityTech →