TDS exemption for senior citizens explained: Form 121 replaces Form 15H — key updates and mistakes to avoid

Senior citizens who are earning income below the basic exemption limit will no longer use Form 15H to avoid tax deducted at source (TDS). Under the Income-tax Rules 2026, this form has been replaced by Form 121.

Both Form 15G and Form 15H have now been replaced by a single, unified Form 121. The old forms were particularly used by individuals and senior citizens with low taxable income to prevent unnecessary TDS deductions.

Meanwhile, Form 121 serves the same purpose. It can be used by a taxpayer to avoid TDS if their tax liability for the year is nil. Based on this declaration, the payer will not deduct tax on income or credit due to the taxpayer.

What has changed for taxpayers?

Form 121 represents a major transformation as it integrates the former Forms 15G and 15H into one single declaration. Previously, taxpayers were required to select one of the two forms based on their age- Form 15G for persons below 60 years of age and Form 15H for senior citizens.

The basic exemption limit under the old tax regime is ₹2,50,000 for individuals below 60 years, and ₹3,00,000 for senior citizens. Under the new tax regime, the limit is ₹4,00,000 for all individuals.

Now that the old forms have been scrapped, this age-based distinction is no longer applicable. The government has introduced a single, age-neutral format that captures the required information.

Speaking about the advantages of adopting a unified form, Siddharth Maurya, Managing Director, Vibhavangal Anukulkara Pvt Ltd, said that the approach “minimizes the form selection dilemma and reduces the burden of duplicate information. The clarity and simplicity of the forms make the electronic filing process much easier, especially for less-experienced taxpayers.”

Beyond the nil tax liability requirement, the transition to Form 121 introduces two non-negotiable digital prerequisites:

• Mandatory ITR history: A taxpayer must disclose their income tax filing status for the last two tax years. If you failed to file despite having taxable income, the system flags you as a "specified person," triggering higher TDS rates regardless of the form.
• PAN-Aadhaar Linkage: Your PAN must be Aadhaar-linked and operative. An inoperative PAN rendering Form 121 invalid is a fatal compliance error, mandating a 20% TDS rate under the new regulatory framework, according to Jatin Goyal, a chartered accountant by profession and the founder of Taxocity.com.

Income covered under Form 121

According to Goyal, Form 121 is the mandated vehicle for preventing TDS on specific domestic revenue streams. The declarable income categories include:

• Interest income: Payouts from bank FDs, RDs, post office schemes, and corporate bonds.
• Dividends: Payouts from equity shares and mutual fund units.
• Rental income: Lease payments that exceed the statutory threshold limits
• EPF and insurance: Premature withdrawals and taxable insurance proceeds or commissions.

While you cannot use Form 121 to stop TDS on salary or business income, these figures must be included in your "estimated total income" calculation, Goyal said, adding that their inclusion is important to verify that your aggregate income across all heads remains within the basic exemption limit, thus ensuring the legal validity of your declaration.

UIN system

A new feature of Form 121 for filing TDS returns is the UIN or Unique Identification Number. The purpose of the UIN is to enhance transparency and accountability in TDS filing by tracing notices and claims under the number.

“It is important for the tax authorities as UINs help to assess and confirm the submission of TDS claims to banks and companies. UINs also prevent the erroneous filing of multiple TDS claims,” Goyal explained.

Key mistakes to avoid

Taxpayers are advised to avoid certain errors to have the greatest benefit from the TDS return. Many of the mistakes can lead to tax notices and penalties, Chandni Anandan, tax expert at ClearTax, warned.

Here are some of the key mistakes one should avoid:

• Filing Late: You must file in April; banks cannot refund tax once deducted.
• Single Filing Myth: You must submit a separate Form 121 to every payer/bank.
• Inoperative PAN: If PAN isn't Aadhaar-linked, you face a mandatory 20% TDS rate.
• Over-reliance on auto-approval: Multiple submissions need payer discretion. Income profiles not aligned with realistic expectations can invite a probe.
• ITR linkage neglect: Even if exempt, report totals in ITR schedule TDS for audit-proofing.

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