Winning Bizness Desk

Mumbai.Employees seeking exemption from tax deducted at source (TDS) on provident fund (PF) withdrawals will have to use Form 121 instead of Forms 15G and 15H from the financial year 2026-27. The change has been introduced under the new Income-tax Act, 2025. The Employees’ Provident Fund Organisation (EPFO) has shared official information about the change in a post on X.

However, submitting the new form does not automatically guarantee exemption from TDS. Applicants must meet the prescribed eligibility conditions to claim the benefit.

What Form 121 means for PF account holders

Form 121 is a self-declaration through which a taxpayer declares that their estimated tax liability for the relevant tax year is nil. Eligible individuals can submit the form to request that tax not be deducted at source on specified income, provided they fulfil the applicable conditions.

Until now, Forms 15G and 15H were used for this purpose. Under the revised arrangement, a single Form 121 will replace both forms from FY 2026-27. The change is not restricted to provident fund withdrawals. Subject to the prescribed conditions, the form may also apply to TDS on interest from bank and post office deposits and certain other types of income.

Key points employees should know before withdrawing PF

Employees should check the applicable rules before submitting a withdrawal request. The main factors determining whether TDS applies include:

• The total period of continuous service.
• The amount being withdrawn from the PF account.
• The taxpayer’s estimated income and tax liability for the relevant financial year.
• Whether the individual meets the eligibility conditions for submitting Form 121.

These factors determine whether TDS is applicable and whether the taxpayer can claim an exemption under the relevant provisions.

What happens if PF is withdrawn before five years

Withdrawing provident fund savings before completing five years of continuous service can attract TDS in certain circumstances. If the withdrawal exceeds Rs 50,000 and the applicable conditions are met, TDS may be deducted at 10 per cent when the employee has provided PAN details.

Employees should therefore assess their service period and withdrawal amount before making a decision. Their estimated income for the relevant tax year is also important when determining whether they qualify for an exemption.

Will employees be able to submit Form 121 online?

The online filing facility for Form 121 is not currently available, according to the information provided in the report. The facility is expected to be introduced soon, making it easier for employees to submit the declaration electronically.

Once the facility becomes available, employees will be able to complete the process online instead of relying on the existing forms. However, the introduction of the online facility will not remove the eligibility requirements. Applicants must still satisfy the prescribed conditions to qualify for TDS exemption.

What PF subscribers must check before filing

Before withdrawing their provident fund savings, employees should verify the relevant tax rules and ensure that their declaration is accurate.

They should pay particular attention to the following:

• Whether they have completed five years of continuous service.
• Whether the proposed withdrawal exceeds Rs 50,000.
• Whether their estimated tax liability is nil.
• Whether they meet the conditions for submitting Form 121.

The new form will replace Forms 15G and 15H from FY 2026-27. Employees must ensure that they use the applicable form and meet the prescribed requirements before seeking exemption from TDS.