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The Unified Declaration and Enhanced Oversight
The Employees' Provident Fund Organisation (EPFO) has officially transitioned to a singular tax declaration form, Form 121, replacing the previously distinct Forms 15G and 15H. This change, effective from April 1, 2026, aligns with India's new Income Tax Act, 2025. The goal is to simplify the process for millions of EPF subscribers and others. It removes the age-dependent criteria that previously required Form 15G (for those under 60) or Form 15H (for senior citizens) to declare income below the taxable threshold and avoid Tax Deducted at Source (TDS). Form 121 acts as a self-declaration, confirming that the taxpayer's estimated total income for the 'Tax Year'—a new term replacing 'previous year' and 'assessment year'—will not be taxed.
Form 121 introduces a more sophisticated compliance framework. Each submission receives a unique identification number (UIN), which includes the tax year and the payer's Tax Deduction and Collection Account Number (TAN). This helps tax authorities track declarations more effectively. Taxpayers may also need to provide details from their income tax returns for the preceding two years for verification, a step less prominent with the older forms. This change aims to both ease compliance and strengthen the audit trail for TDS exemptions. The Income Tax Act, 2025, has also consolidated TDS provisions, particularly Section 393 for non-salary payments, creating a more cohesive system.
Navigating EPF Withdrawal TDS
EPF subscribers should understand TDS rules for withdrawals. Generally, TDS applies only if service tenure is less than five continuous years and withdrawals exceed ₹50,000. Providing a PAN limits TDS to 10%; without a PAN, deductions can be higher (historically up to 34.608% or commonly 20%). Form 121 is for individuals (mainly resident Indians and HUFs) who expect nil tax liability. They can use it to avoid TDS on EPF withdrawals if their total estimated income, including the withdrawal, stays below the taxable limit. Companies and firms cannot use Form 121.
The New TDS Landscape
The broader tax reforms with the Income Tax Act, 2025, significantly consolidate TDS rules. Previously found in various sections (192 to 194T of the 1961 Act), TDS for non-salary payments is now mainly covered by Section 393. This unified approach aims to simplify processes for deductors with a single, table-driven framework for payments to residents and non-residents. The new 'Tax Year' concept, replacing the older 'Previous Year' and 'Assessment Year' system, is another structural change for clarity.
Historical Hurdles and Future Trajectory
The move to Form 121 addresses common issues with previous forms. These included selecting the wrong assessment year, underestimating total income, PAN mismatches, and confusion due to age-specific forms. With the EPFO adding about 19.14 lakh members in April 2025 alone, an efficient declaration process is essential. Unlike the National Pension System (NPS) with market-linked returns, EPF offers guaranteed returns and a simpler withdrawal structure, making accurate TDS declarations vital.
Compliance Risks and Stricter Oversight
While Form 121 aims for simplification, the responsibility for accurate self-declaration is high, with potential penalties for misrepresentation under the new Income Tax Act, 2025. The requirement to potentially provide prior year income tax return details for verification, along with UIN generation, indicates increased scrutiny. Companies and firms are excluded from Form 121, meaning they face more complex TDS compliance. Individuals whose estimated income exceeds the taxable threshold during the 'Tax Year' will find their Form 121 declaration invalid. They must correct it promptly or face consequences for an incorrect declaration. Declarations made using old Forms 15G/15H after April 1, 2026, may require a follow-up submission of Form 121 for full compliance, adding an administrative step for those who delay.