Background & Introduction
The Directorate of Income-tax (Systems), New Delhi, under the Central Board of Direct Taxes (CBDT), Ministry of Finance, has issued Notification No. 01/CPC(TDS)/2026, dated March 28, 2026, laying down a clear procedure and format for generating and managing Unique Identification Numbers (UIN) for declarations filed in Form No. 121 and the quarterly filing of Part B, under the Income-tax Act, 2025.
This notification is significant as it marks a watershed moment in India’s direct tax compliance landscape — the transition from the well-known Forms 15G and 15H to the new, unified Form 121 under the newly enacted Income-tax Act, 2025.
What is Form 121? (Replacing Forms 15G & 15H)
Form No. 121 is a self-declaration submitted by individuals to avoid deduction of tax at source (TDS) on specified incomes—such as interest from bank deposits, post office deposits, or similar sources—where their total income falls below the taxable threshold. This declaration is furnished under section 393(6) of the Income-tax Act, 2025, read with Rule 211 of the Income-tax Rules, 2026.
Form No. 121 replaces earlier Forms 15G and 15H to provide a unified mechanism for eligible taxpayers to avoid tax deduction at source on specified incomes where their estimated total income is nil. The provision applies to resident individuals (whether below or above 60 years of age), HUFs, and specified entities, but does not cover companies, partnership firms, or non-residents.
Core Requirements Under Notification No. 01/CPC(TDS)/2026
- Obligation on the Payer
The notification covers cases where tax is not deducted as per the declaration furnished by the payee to the payer
- Mandatory PAN Requirement
The payee must mention their PAN while submitting the declaration. Without a valid PAN, the declaration will be treated as invalid and TDS cannot be waived.
- The 26-Character UIN System — The Heart of the Notification
For every declaration received, the payer is required to generate a 26-character Unique Identification Number (UIN). The UIN is composed of three elements: a sequence beginning with the letter “D” followed by nine digits, the relevant tax year in a six-digit format, and the payer’s TAN.
This structured UIN ensures every Form 121 declaration is uniquely traceable across the entire tax ecosystem.
- Handling Paper Declarations
If a declaration is received in paper form, it must be digitised and assigned a UIN in the same sequence as electronic submissions. The sequence numbering will restart from “1” at the beginning of each tax year for every TAN.
This means banks and financial institutions can no longer maintain paper-only records — all declarations must be brought into the digital fold.
- Monthly Reporting & Quarterly Filing
The payer must upload a consolidated monthly statement of all Forms 121 received on the Income-tax Department’s e-filing portal using the TAN login, even if no TDS has been deducted.
In addition, Part B of Form 121 — the payer’s side of the declaration — must be filed quarterly as prescribed under the notification.
Who Can File Form 121?
Resident Individuals (whether below 60 years or 60 years and above), Hindu Undivided Families (HUFs), and other specified eligible entities that meet the stipulated criteria are eligible. Form 121 cannot be filed by companies or partnership firms. It is also not applicable to non-residents.
Effective Date
The procedure or the format specified in the notification is scheduled to take effect from April 01, 2026. This aligns with the commencement of the new Income-tax Act, 2025, which replaces the Income-tax Act, 1961.
Broader Context: New Income-tax Act, 2025
It is important to place this notification within the larger framework of India’s sweeping tax reform. The Income Tax Act, 1961 stands repealed effective 01.04.2026, pursuant to Section 536 of the Income Tax Act, 2025.
The CBDT has notified the Income-tax Rules, 2026 effective April 1, 2026, providing the procedural and operational framework for implementation of the new Income-tax Act, 2025, focusing on simplicity, clarity, and efficiency in tax compliance and administration.
Notification No. 01/CPC(TDS)/2026 is thus one of the first operational instructions issued under this new regime.
Impact & Analysis
For Payers (Banks, Financial Institutions, Companies):
- Must upgrade systems to generate the standardised 26-character UIN for every Form 121 received.
- Must ensure monthly upload of consolidated declarations via TAN login on the e-filing portal.
- Paper declarations must be digitised promptly and assigned UINs in the correct sequence.
For Declarants (Individuals/HUFs):
- The form is valid for the Tax Year concerned; if eligible, one should submit it at the beginning of the year or before the payment/credit to avoid TDS.
- The revised form introduces digitisation, pre-filled data, validation checks, and improved structure, reducing compliance burden while enhancing transparency.
For the Tax Administration:
- On an average, around 90 lakh declarations for earlier Form 15G and around 1 crore declarations for earlier Form 15H have been submitted annually across financial institutions, banks, and companies in the last five years. The UIN system will now make this massive volume of declarations fully traceable and auditable.
Conclusion
CBDT Notification No. 01/CPC(TDS)/2026 is a forward-looking compliance measure that digitises and standardises the TDS exemption declaration process under India’s new direct tax framework. The introduction of a mandatory 26-character UIN, monthly consolidation obligations on payers, and quarterly Part B filings collectively strengthen the audit trail for non-deduction cases, reduce fraudulent declarations, and align India’s TDS compliance architecture with the philosophy of the Income-tax Act, 2025 — clarity, simplicity, and technology-driven governance.
Taxpayers and payers alike should ensure their systems and processes are updated before April 1, 2026, to avoid compliance gaps under the new regime.
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