Quick answer box
The deduction lets you lower taxable income by up to ₹10,000 for interest earned on a savings-bank account. It is now called Section 153 of the Income-Tax Act, 2025. It applies only to non-senior individuals and Hindu Undivided Families (HUFs) who use the old tax regime. Senior citizens have a separate ₹50,000 limit under the same Section 153. The rule covers interest from banks, post offices and eligible co-operative banks only.
What 80TTA was and what Section 153 is now
| Provision | Who could claim | Interest covered | Max deduction |
|---|---|---|---|
| 80TTA (till FY 2025-26) | Individuals (<= 60 yrs) and HUFs | Savings-bank account only | ₹10,000 |
| 80TTB (till FY 2025-26) | Senior citizens (>= 60 yrs) | Savings-bank, FD, RD, other time deposits | ₹50,000 |
| Section 153 (from FY 2026-27) | Same as 80TTA and 80TTB combined | Same categories as before | Same limits (₹10,000 for non-seniors, ₹50,000 for seniors) |
The merger does not change any limits. It only moves the two old sections into one new section.
Who can claim it
- Individuals who are not senior citizens (i.e., below 60 years).
- HUFs (the ₹10,000 tier – an HUF cannot be a senior citizen, so only this tier applies).
- Senior citizens (60 years or more) can claim the higher ₹50,000 limit.
- NRIs can claim the deduction only on interest earned in a taxable NRO savings account. Interest on NRO fixed deposits does not qualify.
- Firms, companies, AOPs, BOIs cannot claim the deduction, even if the account is in their name.
What interest qualifies
The deduction works only for savings-account interest earned from:
- Commercial banks.
- Post office savings accounts.
- Eligible co-operative banks.
It does not apply to interest from:
- Fixed deposits (FD).
- Recurring deposits (RD).
- Any other time-deposit product.
The rule does not require a ceiling on your total income. Even a high-earner can claim the full ₹10,000 (or ₹50,000 for seniors) if the interest is from an eligible savings account.
Worked example
- Mr. Sharma earned ₹14,000 as interest on his bank savings account in FY 2026-27.
- He files his return under the old regime.
- He claims the maximum ₹10,000 deduction under Section 153.
Taxable interest after deduction = ₹14,000 – ₹10,000 = ₹4,000.
If his marginal tax rate is 20 %, the tax payable on interest falls from ₹2,800 to ₹800.
Tax saved = ₹2,800 – ₹800 = ₹2,000.
Adding the 4 % health and education cess (20.8 % total) makes the saving ₹2,080.
Senior citizens vs others
- Non-senior individuals and HUFs – limit ₹10,000 and only on savings-account interest.
- Senior citizens (60 + years) – limit ₹50,000. They can include interest from savings accounts, fixed deposits, recurring deposits and other time deposits.
- The senior benefit applies only to resident seniors. An NRI senior cannot use the ₹50,000 limit.
Old regime vs new regime
| Tax regime | Deduction available? | Net benefit (at 20 % slab) |
|---|---|---|
| Old regime | Yes – up to ₹10,000 (or ₹50,000 for seniors) | ₹2,080 saved on ₹14,000 interest (example) |
| New regime | No – deduction is removed | Full interest taxed; ₹2,800 tax on ₹14,000 interest |
If you have switched to the new/default regime, you lose this saving. You must decide whether the lower tax rates of the new regime outweigh the loss of the deduction.
How to claim it in your ITR
- Collect proof – bank passbook or statement showing interest earned.
- Enter the amount under “Income from Other Sources” in the ITR form.
- In the Deduction Schedule, select “Section 153 – Savings-account interest”.
- Input the amount you are claiming (maximum ₹10,000 or ₹50,000).
- Keep the original documents safely – no documents need to be uploaded with the electronic return, but you may need to show them if the tax department raises a query.
Common mistakes
- Claiming FD or RD interest under the deduction – only savings-account interest qualifies for non-seniors.
- Using the new tax regime and expecting the deduction – it disappears in the new regime.
- Skipping interest shown in the AIS/Form 26AS – the tax department already records the interest. Leaving it out may raise a mismatch.
- Forgetting post-office interest – it is eligible, but many taxpayers omit it.
- Assuming an NRI can claim the senior limit – the ₹50,000 benefit works only for resident seniors.
- Including interest of a firm or company – only individuals and HUFs can use the deduction.
FAQ
-
Is savings-account interest taxable in India?
Yes. It is taxed under “Income from Other Sources” at your applicable slab rate. The deduction simply reduces the taxable amount. -
Can I claim 80TTA on fixed-deposit interest?
No. Fixed-deposit interest is not covered by 80TTA. Senior citizens can claim it under the senior limit of Section 153. -
What is the 80TTA limit?
The limit is ₹10,000 per financial year for non-senior individuals and HUFs. -
Is 80TTA available in the new tax regime?
No. The deduction exists only in the old tax regime. -
Can an NRI claim the 80TTA deduction?
An NRI can claim it only on interest earned in a taxable NRO savings account. It does not apply to NRO fixed deposits. -
What is Section 153 of the new Income Tax Act?
Section 153, introduced in the 2025 Act, merges the old 80TTA and 80TTB provisions. The limits stay the same – ₹10,000 for non-seniors and ₹50,000 for seniors – and the same eligibility rules apply.
TDS on savings-account interest
Banks do not deduct TDS on savings-account interest, whatever the amount. TDS only applies to fixed-deposit and other time-deposit interest: 10% (20% without PAN) once interest crosses Rs. 50,000 a year, or Rs. 1,00,000 for senior citizens, since 1 April 2025. So for a pure savings-account saver, the full interest lands in your account, and you claim the Rs. 10,000 deduction yourself at filing time.
How to find your total interest for the year
- Open your Annual Information Statement (AIS) on incometax.gov.in – it lists interest reported by every bank and post office.
- Cross-check with Form 26AS.
- Add interest from all savings accounts, including joint accounts and post-office accounts. The Rs. 10,000 ceiling applies to your total across all accounts, not per account.
Post-office interest: what qualifies
Post-office savings-account interest qualifies for the deduction. Post-office fixed-deposit, recurring-deposit and NSC interest do not qualify for non-seniors – only for senior citizens within their Rs. 50,000 limit.
What if your interest is less than Rs. 10,000?
The deduction can never be more than the interest you actually earned. If you earned Rs. 6,500 in savings-account interest, your deduction is Rs. 6,500 – not Rs. 10,000. The Rs. 10,000 figure is a ceiling, not a flat amount.
Joint accounts and family accounts
Interest on a joint savings account is taxed in the hands of the first (primary) account holder. Only that person can claim the deduction on it. If you are the second holder, you cannot split or share the deduction.
Interest on a minor child’s savings account is added (clubbed) to the parent’s income. The parent can then claim the deduction on that clubbed interest as part of their own total.
Interest you should not forget
Small amounts add up across accounts. People commonly forget: post-office savings interest, interest in dormant old accounts, interest on the savings portion of salary accounts, and NRO savings interest for NRIs. The AIS usually captures all of these – use it as your checklist.
Seniors: when the Rs. 50,000 limit helps most
A senior citizen with Rs. 3 lakh in FD interest and Rs. 20,000 in savings interest claims Rs. 50,000 – not Rs. 3.2 lakh. The deduction is capped, and it works only in the old regime. Many seniors in the new regime (with its higher basic exemption and rebate) still pay zero tax overall – run both regimes before deciding.
Official sources
- Income-Tax Act 2025 – Section 153 (official Gazette).
- Central Board of Direct Taxes (CBDT) website – incometax.gov.in.
- Form 26AS / Annual Information Statement (AIS) – for interest details.
Last updated: 18 October 2026
This article provides general information only. It is not tax advice. Please confirm your own situation with a qualified chartered accountant.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.