We often keep our hard-earned money in a fixed deposit (FD) or savings account in the bank so that we can get some interest on it. But many times it happens that your total annual income does not come under the ambit of tax, yet the bank deducts TDS on the interest money. If you are also facing this situation, then the Income Tax Department gives some such options from which not a single penny will be deducted from you. Along with this, there has also been a major change in the rules from the financial year 2026-27, where a new form has replaced the old form. At the same time, if you are assuming that ‘if tax is not paid then what is the need to file return (ITR)’, then this carelessness can cost you dearly.
Understand the mathematics of TDS saving forms
To avoid deduction of TDS on interest received from bank, post office or any other financial institution, a self-declaration form has to be submitted. Till now mainly two forms have been in use. The first form is 15G, which is for citizens below 60 years of age and Hindu Undivided Families (HUF). This is filled when your total income is less than the basic limit of tax exemption and your estimated tax liability is zero. The second Form 15H is specially designed for senior citizens aged 60 years and above. After retirement, the elderly often depend on the interest on FD, in such a situation this form ensures that no scissors are used on the limited earnings of the elderly without tax liability.
The old rule changed from this year
If you are wondering how to choose the right form according to your age, then a major change has been made under the Income Tax Act 2025. Form 15G and 15H have been removed from the financial year 2026-27 and a new ‘Form 121’ has been implemented in their place. Now there is no need for taxpayers to get confused about different forms. This is a unified form. If your tax liability is nil, then now you only have to submit Form 121 to your bank, EPFO, mutual fund or post office to save your interest income from TDS.
What to do if tax is deducted by mistake
Many times banks deduct TDS due to lack of correct information or failure to submit the form on time. In such a situation, there is absolutely no need to panic. The direct and safe way to get back the deducted money is to file Income Tax Return (ITR). You can check your Form 26AS or Annual Information Statement (AIS). After this, while filing your return, give correct information about interest income and claim credit of TDS. If your final tax turns out to be zero, the Income Tax Department will refund all the extra money deducted to your bank account.
Heavy penalty will be imposed for not filing returns
Often people assume that when no tax is being paid on them, then why should they complete the formalities of filing ITR. This thinking of yours can cause huge financial loss in the year 2026. For not filing returns, you may have to pay a penalty of up to Rs 5,000. Additionally, if you have incurred business or capital loss, you will not be able to carry forward that loss to subsequent years without filing the return.
Also read- Tax refund money getting stuck due to long name? what is the whole matter
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