You open a fixed deposit, and a few months later the bank cuts 10 percent of the interest as TDS. You remember a form your parents used to submit, Form 15G or 15H, and search for it. Many searches still land on pages for the old Form 15G or 15H, and handing in that old copy is the wrong move. From 1 April 2026 that form has a new name, and the old copy is the wrong one.
Form 15G and Form 15H have been replaced by a single Form 121, a declaration that lets a bank pay you interest without deducting TDS when your total tax for the year is nil. This post explains when TDS applies to FD interest, who can submit Form 121, how a freelancer with business income should read the nil-tax test, and what to do if TDS has already been cut.
Form 121 replaced 15G and 15H from 1 April 2026
One form now does the job of both. Form 121 is a declaration under section 393(6) of the Income-tax Act 2025, made under Rule 211 of the Income-tax Rules 2026, and it covers receipt of certain incomes without deduction of tax. The old Form 15G and Form 15H apply to FY 2025-26 and earlier years. For FY 2026-27 onwards, your bank should ask for Form 121.
Returns for FY 2025-26 (assessment year 2026-27) are still filed under the section numbers of the Income-tax Act 1961, so the rest of this post uses those where it needs to. The official form is on the Income Tax Department's e-filing portal. Check the current text there before you sign.
Banks deduct TDS on FD interest only above ₹50,000, or ₹1 lakh for seniors
Since 1 April 2025, TDS on interest from banks, co-operative banks and post offices applies only when the interest in a financial year crosses ₹50,000. For senior citizens the limit is ₹1,00,000. It used to be ₹40,000 and ₹50,000. Business Standard's report on the Budget change and Business Today's note on the April 2025 TDS rules both give these figures.
Your bank adds up all your interest there for the year, not each deposit separately. Three FDs at the same bank that earn ₹20,000 each add up to ₹60,000, so TDS applies. Once it applies, the rate is 10 percent with a PAN. Without a PAN it is 20 percent. Two banks each paying ₹40,000 will not deduct anything, because each bank looks only at its own total.
Form 121 is for people whose total tax is nil
You can submit Form 121 only if you are resident in India and your estimated tax on your total income for the year works out to nil after the section 87A rebate. If you are under 60, the form also expects the income you declare to stay within the basic exemption limit, which is ₹4 lakh in the new regime and ₹2.5 lakh in the old one, as the form describes it. If you are 60 or older at any time in the year, the nil-tax test alone applies. NRIs, companies and firms cannot use it.
The word to focus on is total. The test is not whether the interest is small. It is whether the tax on everything you earn is zero. The form also cannot be used for income that is clubbed with someone else's. Read the form on the e-filing portal before you sign.
A freelancer has to count business income in the nil-tax test
If you earn from freelancing, your professional income counts as part of your total income. So a freelancer whose total tax is not nil should not submit Form 121, whatever the size of the FD. Whether you qualify depends on your own numbers, and a CA can confirm it for your case.
Here is an illustration for the new regime, using the AY 2026-27 slabs and the ₹12 lakh rebate limit that the guide to the 87A rebate and the tax-free limit for freelancers explains. Say your gross receipts are ₹20 lakh and you declare 50 percent as profit under 44ADA, which is ₹10 lakh. Add ₹60,000 of FD interest and your total income is ₹10.6 lakh, below ₹12 lakh, so the tax comes to nil. Push the receipts to ₹26 lakh and the profit alone becomes ₹13 lakh, so a nil-tax declaration would be wrong, even though the FD interest is the same. You can run your own figures in the tax-free income calculator.
Which regime you are in matters too. The old regime gives nil tax only up to ₹5 lakh, so a freelancer comparing the two should look at the old vs new tax regime calculator before deciding what to declare.
Submit one Form 121 to each bank before the interest is credited
Give the form to every bank or post office that pays you interest, separately, and do it before the interest is credited. It is valid for one financial year, so you must renew it every April. A PAN is mandatory, and without one the bank deducts TDS at 20 percent.
If you submit it late, TDS already deducted stays deducted. The bank does not reverse it. You claim it back when you file your return. That is why the form needs to reach the bank at the start of the year, ideally when you open or renew the FD, and not after the first interest credit.
TDS is not the tax: report the interest and claim any refund in your ITR
Staying below the threshold, or submitting Form 121, does not make FD interest tax-free. The interest is still your income and goes into your return under income from other sources. TDS is only the bank collecting some of the tax in advance, and the credit shows up in your Form 26AS and AIS. The post on freelance tax in India shows how TDS credits are claimed when you file.
If the bank deducted TDS and your total tax turned out to be nil, you file your return, show the interest, and claim the TDS as a refund. A missing or mismatched credit is a separate problem, which the guide on what to do when Form 16A is missing covers. And if your tax is not nil, the interest also enters the advance tax calculation, as the guide to paying advance tax online explains.
Four mistakes that cost freelancers money
Four mistakes cost the most. Giving the old Form 15G or 15H for FY 2026-27, which your bank may reject. Signing a nil-tax declaration when your total tax is not nil, which is an offence under section 277 of the Income-tax Act 1961. Giving one form to one bank and assuming it covers the rest, or forgetting it expires every year. Leaving out your PAN, the costliest, because TDS doubles to 20 percent.
Add the interest to your return even when no TDS was cut, because 26AS and AIS can only show what the bank reported.
Rinto keeps your freelance receipts in one place
Rinto lets you mark invoices paid and always know who owes you what, and see income by client. Rinto does not file returns, give tax advice or compute your final tax, so take the numbers to your CA or the e-filing portal. This post is general information, not tax advice.
Frequently Asked Questions
Is Form 15G still valid in 2026?
Form 15G and Form 15H were replaced by Form 121 from 1 April 2026. They applied to FY 2025-26 and earlier years, so a declaration for FY 2026-27 needs Form 121. Form 121 is the form for FY 2026-27. If your bank's website or branch still shows the old names, submit Form 121 from the e-filing portal and ask the bank to confirm it has received it. The official Form 121 is on the Income Tax Department's e-filing portal, and your bank or CA can confirm how it wants the form submitted.
What is the TDS limit on FD interest for FY 2026-27?
Banks, co-operative banks and post offices deduct TDS on interest only when it crosses ₹50,000 in a financial year, or ₹1,00,000 for senior citizens. These limits came in from 1 April 2025 and replaced ₹40,000 and ₹50,000. The limit is counted on your total interest at one bank, across all your deposits there. Above it, TDS is 10 percent with a PAN and 20 percent without one. Interest below the limit is still taxable income, so you still report it in your return. Two banks each paying ₹40,000 trigger no TDS, because each bank counts only its own total.
Can a freelancer submit Form 15G or Form 121?
Only if your total tax for the year is nil. The test looks at all your income, so your professional profit, your interest and any other income all count together. A freelancer with a ₹10 lakh presumptive profit and ₹60,000 of interest passes the nil-tax test under the new regime, while one with ₹13 lakh of profit fails it. You must also be resident in India. If you are under 60, the form also expects your declared income to stay within the basic exemption limit as the form describes it, so check that condition on the form before you sign. Your CA can confirm either test for your numbers. A wrong declaration is an offence under section 277 of the 1961 Act.
Do I need to submit Form 121 every year?
Yes. The declaration is valid for one financial year only, so you must submit a fresh Form 121 each year, and give one to each bank or post office that pays you interest. Submit it before the interest is credited, ideally at the start of the year. Your situation can change between years, since a bigger freelance income can push your total tax above nil, so judge the nil-tax test again each time instead of copying last year's form. A PAN is mandatory every time.
How do I get TDS refunded if the bank already deducted it?
Submitting Form 121 late does not undo TDS already deducted. You claim it back when you file your income tax return. Report the FD interest under income from other sources, check that the TDS appears in your Form 26AS and AIS, and claim it as tax already paid. If your total tax is nil, the whole amount comes back as a refund after your return is processed. If the credit does not show up, ask the bank to correct its TDS return. The e-filing portal shows the status of a refund, and a CA can help if the figures do not match.