Employees seeking relief from tax deducted at source (TDS) on eligible Employees’ Provident Fund (EPF) withdrawals must use Form 121 from tax year 2026–27 onwards. The consolidated declaration replaces Forms 15G and 15H under the Income-tax Act, 2025 and the Income-tax Rules, 2026. The Employees’ Provident Fund Organisation (EPFO) listed the transition in its circular dated April 13, 2026.
The change is particularly relevant to employees withdrawing their accumulated provident fund balance before completing five years of continuous service, where the withdrawal attracts TDS. Eligible members must furnish the prescribed declaration to claim payment without deduction of tax.
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However, an early withdrawal does not automatically become tax-free merely because Form 121 is submitted. The declaration provides relief from withholding tax when the statutory conditions are satisfied; the underlying tax treatment of the withdrawal remains governed by the applicable law.
The five-year service requirement continues to be significant. The Income-tax Act, 2025 provides for exclusion of the accumulated provident fund balance from total income where an employee has completed five years or more of continuous service. It also recognises exceptions involving termination because of ill-health, contraction or closure of the employer’s business, or another cause beyond the employee’s control. Where balances from previous employers’ recognised provident funds have been transferred, the corresponding earlier service periods count towards the requirement.
The withdrawal amount also matters. The Income Tax Department’s TDS guidance states that no TDS applies where the taxable premature provident fund withdrawal is less than ₹50,000. Absence of TDS, however, does not itself establish that the income is exempt from tax.
The statutory references require care during the transition. Section 192A belongs to the Income-tax Act, 1961. Under the Income-tax Act, 2025, the relevant provision for deduction on the accumulated provident fund balance is Section 392(7), while the declaration mechanism is contained in Section 393(6).
Form 121 is a declaration that the taxpayer’s estimated tax liability for the relevant tax year is nil. It combines the earlier Forms 15G and 15H into one form, but eligibility still depends on the declarant’s circumstances.
According to the department’s FAQs, individuals below 60 years and other eligible persons must satisfy two conditions: tax on estimated total income must be nil, and the aggregate specified income covered by the declaration must not exceed the maximum amount not chargeable to tax. Individuals aged 60 years or above may furnish the declaration where tax on their estimated total income is nil, subject to the applicable statutory requirements.
The form has two principal parts. Part A contains the taxpayer’s declaration, while Part B concerns the payer’s reporting of declarations received. Employees therefore furnish their declaration to the payer or deductor; the TAN-based filing process described in the department’s user manual is the deductor’s reporting process.
For this reporting, the deductor logs into the Income Tax e-filing portal using its TAN and password, opens “e-File”, selects “Income Tax Forms” and then “File Income Tax Forms”. Under the category for the Income-tax Act, 2025, it selects Form 121 and chooses the filing type, tax year and quarter.
The online interface contains three sections covering the payer’s particulars, the declarant and declarations received, and the final declaration. The payer checks its prefilled profile information, enters the required PAN details and completes the remaining particulars before submission.
Timing is essential. The department advises taxpayers to furnish their declaration before the relevant income is credited or paid, preferably at the beginning of the tax year where appropriate. Deductors must report the declarations by the seventh day of the month immediately following the relevant quarter. For employees planning an eligible EPF withdrawal, submitting a complete Form 121 before payment is therefore central to obtaining relief from TDS at source.
