India permanently retired the 64-year-old Income Tax Act of 1961 this week. On April 1, the government activated a sweeping digital tax overhaul. The structural shift instantly killed off dozens of legacy compliance documents.
Senior citizens and low-income earners are facing the most immediate hurdle. Taxpayers seeking Tax Deducted at Source (TDS) exemptions can no longer use the familiar Form 15H or Form 15G. The government replaced both with a unified, age-neutral declaration called Form 121.
Filers must now disclose their income tax filing status for the past two years, according to a detailed report outlining the new rules. People who fail to file past returns risk being flagged as specified persons. That triggers higher TDS rates.
Taxpayers submit the document to financial institutions to block TDS deductions on bank fixed deposits, mutual funds, dividends, and EPF withdrawals. The business sector is adapting rapidly as financial institutions update their backend software.
A linked and operative PAN is absolutely mandatory. Submitting Form 121 with an inoperative PAN renders the document instantly invalid. Banks are required to hit the account with a mandatory 20 percent TDS penalty.
Taxpayers cannot assume one document covers all accounts. A separate Form 121 must go to every specific payer or bank. Experts warned late filers that banks cannot refund TDS once it leaves the account.
How the 26-Character UIN Closes the Exemption Loophole
The most aggressive policy shift in the rollout of Form 121 happens behind the scenes. The government introduced a mandatory 26-character Unique Identification Number (UIN).
For decades, the dual-form system allowed individuals to submit multiple declarations across different banks. The fragmented records were easily manipulated. The new framework forces banks to generate a specific UIN for every single Form 121 submission.
Tax authorities can now centrally track and aggregate an individual’s exemption claims across the entire financial system. The digital net prevents erroneous or duplicated filings. The days of siloed, paper-based exemptions are officially over.