When No TDS Is Deducted: Form 121 (Old Form 15G and 15H), Exempt Payees and Personal-Purpose Payments under Section 393 (Tax Year 2026-27)
CA Meet Dhrangadhariya 
August 12, 2026
CA Meet Dhrangadhariya August 12, 2026
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Last updated: 20 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
Tax is not deducted at source in every case. Section 393 of the Income-tax Act, 2025 (from 01/04/2026) lists payments and payees where there is no deduction, and lets a person claim receipt without deduction by giving a declaration to the payer. This post explains the declaration in Form 121 and the main no-deduction cases.
A person can receive certain incomes without deduction of tax if he gives the payer a written declaration in duplicate (in the prescribed form) that the tax on his estimated total income of the year in which the income is to be included will be nil.
| Person | Incomes covered |
|---|---|
| An individual who is a resident | Accumulated balance due under section 392(7) (provident fund); insurance commission (Table Sl. No. 1(i)); rent (Table Sl. No. 2(ii)); income from units (4(i)); interest (5(i), (ii) and (iii)); sums under a life insurance policy (8(i)); dividend (7) |
| Any person who is not a company, a firm or the individual above | The same incomes except provident fund balance and dividend: insurance commission, rent, units, interest, life insurance sums |
The declaration does not apply to a person (other than a resident individual who is 60 years or more at any time in the tax year) if the aggregate of the incomes of that kind credited, paid or likely to be credited or paid during the year exceeds the maximum amount not chargeable to tax (note to section 393(6)).
A declaration without a valid PAN is invalid, and the payer must deduct tax as if no declaration was given, at the higher rate under section 397(2) (section 397(2)(f) and (g)).
| Payment | No deduction where |
|---|---|
| Contract payments (Table Sl. No. 6(i)) | A goods carriage operator with ten or fewer carriages gives a declaration with PAN and the payer furnishes the particulars; or an individual or HUF pays exclusively for personal purposes |
| Professional and technical fees (6(iii)) | Paid by an individual or HUF exclusively for personal purposes |
| Dividend (7) | To LIC, GIC and its subsidiaries, other insurers, a business trust by an SPV, other notified persons; or to an individual by a mode other than cash if the total is ₹10,000 or less in the year |
| E-commerce payments (8(v)) | To an individual or HUF e-commerce participant, if gross sales or services are up to ₹5 lakh in the year and the participant has given PAN or Aadhaar |
| Virtual digital asset (8(vi)) | Consideration up to ₹50,000 in the year when paid by an individual or HUF with turnover up to ₹1 crore (business) or ₹50 lakh (profession) and no business income; ₹10,000 in other cases |
| Interest (5(ii), (iii)) | Interest credited to banks and certain financial institutions; interest by co-operative societies to members or other societies; interest on deposits (other than time deposits made on or after 01/07/1995) with a banking company; deposits with primary agricultural credit societies; interest on Motor Accidents Claims Tribunal compensation; interest on zero coupon bonds of specified issuers; interest paid by a firm to a partner |
| Cash payments (393(3) Sl. No. 5) | Payments to the Government, banks, post offices, business correspondents and white label ATM operators |
No deduction at all from payments to the Government, the Reserve Bank of India, a corporation established by a Central Act that is exempt from income-tax, and a specified mutual fund (interest, dividend and other income), under section 393(5). Tax is also not deducted from interest paid by an Offshore Banking Unit to a non-resident (section 393(8)) or on payments to the NPS Trust (section 393(9)).
We prepare declarations, review TDS exemptions for employers and payers, and file the TDS statements. Please reach out to our team and we will be happy to assist.
Form 121 under Rule 211 of the Income-tax Rules, 2026: the declaration under section 393(6) for receiving certain incomes without deduction of tax. Section 393(6) gives one declaration for the persons listed in the Table, instead of separate Forms 15G and 15H.
A resident individual, for an accumulated provident fund balance under section 392(7), insurance commission, rent under Table Sl. No. 2(ii), units, interest, life insurance receipts and dividend; and any person who is not a company, a firm or the individual above, for the income in clauses (a) to (f) of the first entry (section 393(6), Table). The declaration states that the tax on the person’s estimated total income of the year will be nil.
For a person other than a resident individual aged 60 or more at any time during the tax year, the declaration is not available if the aggregate of the income of that kind credited or paid or likely to be credited or paid in the year exceeds the maximum amount not chargeable to tax (note to section 393(6)). A declaration without a valid PAN is invalid, and the payer must then deduct tax under section 397(2) (section 397(2)(f) and (g)).
Allot a unique identification number to each declaration received in a quarter, report the declarations in the quarterly TDS statement of that quarter (even if no tax was deducted), and keep the declaration so that it can be produced for verification for seven years from the end of the tax year in which it was received (Rule 211(3) to (5)). Section 393(7), as substituted by Finance Act 2026, requires the declarations to be delivered to the prescribed authority by the 7th of the month after the end of each quarter.
No. No tax is deducted on payments to contractors (Table Sl. No. 6(i)) or fees for professional or technical services (Table Sl. No. 6(iii)) when credited or paid by an individual or HUF exclusively for personal purposes of the individual or a member of the HUF (section 393(4), Table Sl. Nos. 8(b) and 9).
Yes: payments to the Government, the Reserve Bank, a corporation exempt under its Act, and specified mutual funds (section 393(5)); interest on deposits with a banking company other than time deposits made on or after 01/07/1995; interest on deposits with primary agricultural credit societies; interest on a Motor Accidents Claims Tribunal compensation to an individual (or up to ₹50,000 in the year to others); dividend of ₹10,000 or less to an individual paid by a mode other than cash; e-commerce payments to an individual or HUF up to ₹5 lakh of gross sales with PAN or Aadhaar; and VDA consideration up to ₹50,000 (or ₹10,000 in other cases) in the year (section 393(4)).
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