The new Income-tax Act, 2025 is no longer theoretical. It is now operational, and companies have started issuing practical TDS notices under its provisions. One clear example is Sonata Software Limited’s recent communication to shareholders regarding Tax Deduction at Source on its interim dividend for Financial Year (Tax Year) 2026-27.
On 6 August 2026, the Board of Directors of Sonata Software declared an interim dividend of ₹1.25 per equity share. Alongside the dividend announcement, the company has sent detailed TDS instructions that explicitly reference the new law, the new rules, and the new single declaration form — Form 121.
This is one of the early real-world instances of a listed company applying the post-1 April 2026 TDS framework for dividends.
What Exactly Has Changed?
Under the old Income-tax Act, 1961, resident individuals could submit Form 15G (below 60 years) or Form 15H (senior citizens) to claim nil TDS on certain incomes when their estimated tax liability was nil.
From 1 April 2026, both forms have been abolished. In their place, the Income-tax Rules, 2026 prescribe a single unified form:
- Form 121 (under Section 393(6) of the Income-tax Act, 2025 read with Rule 211 of the Income-tax Rules, 2026)
Form 121 can be used by:
- Resident individuals of any age
- Hindu Undivided Families (HUFs)
provided the estimated total tax liability for the Tax Year is nil.
It covers dividend income (along with bank interest, mutual fund income, rent, insurance commission, certain PF withdrawals, etc.).
Key Points from Sonata Software’s Notice
The communication dated 10 August 2026 (sent via NSDL) clearly states:
- Dividend is taxable in the hands of shareholders under the Income-tax Act, 2025.
- The company will deduct TDS at the applicable rates.
- Resident individual shareholders whose total dividend from the company in Tax Year 2026-27 does not exceed ₹10,000 will face nil TDS, subject to availability of valid PAN.
- For higher amounts (or where exemption is claimed), eligible resident individuals must submit Form 121 (along with self-attested PAN) if they want nil TDS.
- Old Forms 15G/15H will not be accepted for Tax Year 2026-27.
- Documents must be uploaded only on the KFin Technologies portal: https://ris.kfintech.com/form15/
- Last date mentioned in the notice: 13 August 2026.
Higher rates apply in case of:
- Missing / invalid / inoperative PAN → 20%
- Non-residents → 20% + surcharge & cess (or beneficial Tax Treaty rate if documents are furnished)
The notice also covers special categories (AIFs, mutual funds, sovereign wealth funds, lower/nil deduction certificates under Section 395, etc.) with corresponding self-declaration formats (SD1, SD2, etc.).
Why This Matters for Ordinary Shareholders
Many retail investors still treat 15G/15H as the default. That habit is now outdated. Submitting the wrong form (or no form) will result in TDS being deducted at 10% or 20%, after which the only remedy is claiming refund through the Income Tax Return.
Sonata’s notice is useful because it is one of the first detailed, company-specific communications that:
- Explicitly names Form 121
- States that 15G/15H will be rejected
- Gives a hard deadline linked to an actual dividend payment cycle
Similar notices have started appearing from other companies (Crompton, LIC, Divi’s Laboratories and others), confirming that this is now the standard operating procedure across the market.
Practical Checklist for Shareholders
- Check your total expected dividend income for Tax Year 2026-27.
- If you are a resident individual/HUF with nil tax liability and want to avoid TDS, download Form 121 from the Income Tax portal and submit it (self-attested + PAN) on the RTA portal before the deadline.
- Ensure your PAN is valid, operative, and linked with Aadhaar.
- Update KYC (email, mobile, bank details) with the depository or RTA.
- Keep a copy of the submitted form for records.
Bottom Line
The Income-tax Act, 2025 is live. Form 121 is the new reality for nil-TDS declarations on dividends and other specified incomes. Sonata Software’s August 2026 interim dividend notice is a timely, practical illustration of how the new law is being implemented by listed companies.
Shareholders who still rely on the old 15G/15H forms risk unnecessary TDS deductions this year. Act before the respective company deadlines.
(This article is based on the company’s official TDS communication and publicly available information on the Income-tax Act, 2025 and Rules, 2026. It is for informational purposes only and does not constitute tax advice. Shareholders should consult their tax advisors for personal situations.)
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