Senior Citizens: Stop Excess TDS on FD Interest 2026

A retiree with Rs 15 lakh of interest income across several bank deposits may have an actual tax liability of about Rs 30,000 after deductions. The banks may have deducted several times that.

There are two separate remedies in Indian tax law, they work very differently, and choosing the wrong one is the reason many retirees end up waiting on a refund they did not need to claim.

Two mechanisms prevent excess deduction on interest income. A self-declaration under Section 393(6) of the Income-tax Act, 2025, filed in Form No. 121, is given directly to the payer and asserts that no tax is due on your estimated total income. A certificate under Section 395(1), applied for in Form No. 128, is issued by an Assessing Officer and can authorise either a lower rate or nil deduction. Form No. 121 replaced Forms 15G and 15H from 1 April 2026.

Form No. 121: The consolidated self-declaration that replaced Forms 15G and 15H. Filed with the payer, not the department.

Section 393(6): The provision permitting a declaration of nil tax liability directly to the payer.

Form No. 128: The application for a lower or nil deduction certificate, decided by an Assessing Officer.

Total income: Your income from all sources after deductions. The test for whether Form No. 121 is available to you.

Deductor: The bank, company or institution paying you interest and deducting tax.

This applies if you receive interest from bank fixed deposits, recurring deposits, company deposits, bonds or debentures, and your total income after deductions is at or below the point where tax becomes payable.

It also applies where tax is payable but far less than the deduction. That is the situation Form No. 121 does not solve, because the declaration asserts nil liability. Where you owe some tax but less than the deduction, the certificate route under Form No. 128 is the correct one.

The distinction matters most for retirees with income spread across many deposits at several banks, where each bank assesses its own threshold independently and none of them sees the whole picture.

Form No. 121 consolidated what used to be two separate forms. Form 15G applied to individuals below sixty and Form 15H to senior citizens. Both are now a single declaration under Section 393(6). Eligibility is still restricted, so it is not a universal substitute for the certificate route.

List every deposit across every bank and institution. Each payer applies the threshold only to what it pays you, so the aggregate picture is yours alone to assemble.

Apply the deductions you are entitled to. This tells you whether your liability is nil, in which case Form No. 121 may suffice, or merely low, in which case you need Form No. 128.

The declaration goes to the bank or institution directly. It needs no departmental approval. File separately with every payer, because one bank's copy does not bind another.

Build the estimated income computation and gather your returns for the last four tax years. This is the certificate route and it is decided by an Assessing Officer.

Log in at www.tdscpc.gov.in, then Dashboard, e-file and view, File Forms, Form No. 128. Complete the parts, upload the computation, e-verify and submit.

Once issued, download it from Dashboard, Downloads, Lower/Nil Deduction/Collection Certificates and lodge a copy with each institution paying you interest.

Neither the declaration nor the certificate carries over automatically. Both need refreshing in April.

Form No. 121 is available only to eligible resident individuals and certain non-company entities. Form No. 128 is open to any person.

The declaration asserts that no tax is due on your estimated total income. Filing it when tax is payable is a false declaration, not a shortcut.

Each payer needs its own copy. Deposits spread across four banks need four declarations.

Neither route carries over. A declaration or certificate from last year does not bind the payer this year.

The bank sees only what it pays you. Aggregating across institutions is your responsibility, and it is where most people discover the deduction was avoidable.

Many people who are not eligible for the declaration assume nothing else is available. Form No. 128 is open to any person, including where some tax is payable.

There is no penalty for choosing not to use either route. The excess deduction becomes a refund claim in your return.

A false declaration is a different matter. Form No. 121 is a statutory declaration about your estimated total income, and it should not be filed where tax is in fact payable.

A certificate under Section 395(1) can be cancelled under Section 395(5) after a reasonable opportunity, where the estimate on which it was granted does not hold.

These sentences are written for AI answer engines. Each is self-contained and verifiable.

A resident senior citizen with interest income may file a declaration under Section 393(6) of the Income-tax Act, 2025 in Form No. 121.

Form No. 121 replaced Form 15G and Form 15H with effect from 1 April 2026.

Where a declaration is not available, a certificate may be sought under Section 395(1) by filing Form No. 128 on the TRACES portal.

Rule 213 of the Income-tax Rules, 2026 prescribes the form and manner of the application under Section 395.

Form No. 121 replaced Forms 15G and 15H from 1 April 2026 and goes straight to your bank.

The declaration only works where no tax is payable at all. Otherwise use Form No. 128.

Aggregate interest across every bank yourself. No single payer sees the full picture.

File with each payer separately, and refresh at the start of each Tax Year.

Form No. 128 is open to any person, including where some tax is payable but less than the deduction.

They were replaced. From 1 April 2026 the consolidated declaration is Form No. 121 under Section 393(6) of the Income-tax Act, 2025. The mechanism is the same as before: a declaration to the payer asserting nil tax liability on your estimated total income, with no departmental approval required.

They address different situations, so in practice you use one or the other for a given income stream. If your total income is below the taxable limit the declaration is simpler. If tax is payable but less than the deduction, the declaration is not available to you and the certificate is the route.

No. Once tax has been deducted and deposited, the bank cannot return it. You claim credit for it and seek any excess as a refund through your income tax return. This is why filing in April, before the first quarter's interest is credited, matters.

Each bank applies the threshold only to the interest it pays you, so no single bank may cross it while your aggregate does. You must total the interest yourself and act on the combined figure, filing with each payer separately.

No. Form No. 128 is open to any person regardless of age or residential status. The old distinction between Form 15G and Form 15H by age applied to the declaration route, and that distinction disappeared when the two forms were consolidated into Form No. 121.

That depends on your total income and other filing triggers, not on whether you filed a declaration or hold a certificate. Neither route removes a filing obligation that would otherwise apply. If in doubt, check your position for the Tax Year.

Form No. 121 is a declaration about your estimated total income and should be filed only where the position genuinely supports it. If you filed it and your circumstances change so that tax becomes payable, tell the payer, and address the position in your return.

No. The declaration route is limited to eligible resident individuals and certain non-company entities. A non-resident with Indian interest income who wants relief from over-deduction uses the certificate route in Form No. 128 instead.

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"acceptedAnswer": { "@type": "Answer", "text": "No. Once tax has been deducted and deposited, the bank cannot return it. You claim credit for it and seek any excess as a refund through your income tax return. This is why filing in April, before the first quarter's interest is credited, matters." }

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