Section 197A: No Deduction of TDS in Certain Cases

What does no deduction of TDS mean?

A valid declaration permits a payer, such as a bank, to pay specified income without withholding tax when the statutory conditions are met. It is not an exemption from income tax: the recipient must still compute taxable income, satisfy return-filing requirements where applicable and pay any tax due.

The law distinguishes a taxpayer's declaration for nil deduction from an Assessing Officer's certificate for lower or nil deduction under section 197 of the 1961 Act (section 395 of the 2025 Act).

Section 197A of the Income-tax Act, 1961: explanation of its provisions

Sub-sections (1) and (1A): declarations for specified payments

Eligible recipients could furnish prescribed declarations that tax on estimated total income for the relevant previous year would be nil. Sub-section (1) addressed specified payments to resident individuals; sub-section (1A) extended the facility to specified persons other than companies and firms for prescribed income categories, including certain interest, insurance, rent and unit-related payments. The applicable payment section and conditions must be checked individually.

Sub-section (1B): income ceiling

For ordinary declarations, the statutory income ceiling also applied: the specified income or aggregate of such income could not exceed the maximum amount not chargeable to tax, subject to the senior-citizen exception in sub-section (1C). A nil final tax liability alone did not automatically waive this additional condition.

Sub-section (1C): resident senior citizens

A resident individual aged 60 years or more during the relevant previous year could furnish Form 15H where estimated tax on total income was nil. The income ceiling in sub-section (1B) did not apply to this category.

Sub-sections (1D), (1E) and (1F): other non-deduction provisions

Section 197A also addressed qualifying interest paid by Offshore Banking Units on specified deposits or borrowings involving non-residents or persons not ordinarily resident; payments to or on behalf of the specified National Pension System Trust; and certain payments to notified institutions, associations or bodies. These are distinct statutory exclusions, not general Form 15G/15H entitlements.

Sub-section (2): handling declarations

The original text required delivery of a declaration copy to the prescribed income-tax authority. Later procedural rules introduced electronic reporting, unique identification numbers and retention obligations. The operative rule for the relevant year, rather than the historical wording alone, determines payer compliance.

From 1 April 2026: section 393 of the Income-tax Act, 2025

Section 393(6) permits specified recipients to furnish a written declaration for non-deduction on listed categories of payments where tax on estimated total income of the tax year will be nil. Section 393(7) sets out the related conditions, including treatment of eligible senior citizens. The eligible payment categories are specified in the statutory table; the declaration is not valid for every type of income.

The earlier separate Forms 15G and 15H are replaced for Tax Year 2026-27 onward by Form 121, prescribed under rule 211 of the Income-tax Rules, 2026. The eligibility distinctions between ordinary declarants and senior citizens continue to matter even though the declaration form is unified.

Who can submit a nil-TDS declaration?

• Resident individuals below age 60: may qualify for specified income where estimated tax is nil and the applicable income ceiling and other requirements are satisfied.
• Resident senior citizens aged 60 or above: may qualify where estimated tax is nil, subject to the senior-citizen statutory conditions.
• Other eligible persons: certain non-company, non-firm recipients may qualify for specified payments; check the applicable statutory table.
• Non-residents, companies and firms: cannot assume eligibility for the ordinary declaration route merely because their estimated tax is nil.

Provide accurate identity, PAN and income information. An incorrect declaration can expose the declarant to tax and other statutory consequences.

How to submit Form 121 for tax year 2026-27

1. Estimate total income and tax liability for the entire tax year, including income from other payers.
2. Check that the income category and recipient satisfy section 393(6) and (7).
3. Complete Form 121 accurately and submit it to the relevant deductor before the income is credited or paid, preferably early in the tax year.
4. Retain acknowledgement and review the information if income estimates change.

The payer must verify the declaration, allot the required identification number and report it according to the current e-filing procedure. The Income Tax Department's Form 121 user manual describes the operational process and quarterly reporting deadline.

Practical examples

Example 1: resident individual below 60

A resident aged 35 expects bank interest and other income. Even if estimated total tax is nil, the person must also satisfy the relevant income ceiling and specified-payment conditions before furnishing Form 121. The declaration is not automatically valid merely because the payer would otherwise deduct TDS.

Example 2: resident senior citizen

A resident aged 68 expects taxable interest above the ordinary declaration ceiling but has nil estimated final tax. The senior-citizen exception may allow a valid declaration for qualifying income, subject to the statute and truthful estimation.

Example 3: tax already deducted

If TDS has already been deducted, a declaration generally does not reverse that deduction automatically. The taxpayer should reconcile Form 26AS/AIS and claim eligible credit or refund through the income-tax return.

Frequently asked questions

Are Forms 15G and 15H still used after 1 April 2026?

For declarations relating to tax year 2026-27 onward, the Income Tax Department prescribes the unified Form 121. Earlier-year matters remain subject to the applicable earlier framework and transition rules.

Does Form 121 make interest income tax-free?

No. It concerns withholding only. The income must still be included in the tax computation where chargeable.

Can a non-resident use Form 121?

The ordinary declaration categories are restricted by the statute. A non-resident should not assume eligibility and should instead examine the applicable withholding provisions and treaty or certificate mechanisms.

Can I use Form 121 for every payment?

No. It applies only to the persons and payments listed in section 393(6), subject to section 393(7) and the rules.

Official legal sources and guidance

• Section 393, Income-tax Act, 2025 - official statutory text
• Form 121 frequently asked questions - Income Tax Department
• Form 121 user manual - Income Tax Department
• Income-tax Acts 1961 and 2025: transition FAQs
• Income Tax e-filing portal

Updated 27 October 2026. This is general legal information. Check the applicable tax year, current rules, notifications and individual facts before relying on a declaration.