Unable to complete your ITR filing?
Interest earned from bank accounts and deposits is generally taxable under the head Income from Other Sources. However, eligible taxpayers opting for the old tax regime may claim a deduction on certain interest income under Section 80TTA or Section 80TTB of the Income-tax Act, 1961.
What is Section 80TTA?
Section 80TTA allows eligible individuals and Hindu Undivided Families (HUFs) to claim a deduction on interest earned from savings accounts.
The deduction is equal to the eligible savings account interest or ₹10,000, whichever is lower.
Who can claim deduction under Section 80TTA?
The deduction can generally be claimed by:
- Individuals who are not covered by Section 80TTB and
- Hindu Undivided Families (HUFs).
A resident senior citizen eligible for Section 80TTB cannot claim the same interest deduction under Section 80TTA.
Which interest income qualifies under Section 80TTA?
The deduction is available on interest earned from savings accounts maintained with:
- Banks
- Co-operative societies engaged in the banking business and
- Post offices
Which interest is not covered under Section 80TTA?
Section 80TTA does not cover interest earned on time deposits. Therefore, interest from the following is generally not eligible:
- Fixed Deposits (FDs)
- Term deposits and
- Other deposits repayable after a fixed period
Such interest must still be reported as taxable income, even though the Section 80TTA deduction may not be available on it.
Example of Section 80TTA deduction
Suppose Rahul, aged 35 years, earns ₹16,000 as savings bank interest during FY 2025-26.
- Savings interest: ₹16,000
- Maximum Section 80TTA deduction: ₹10,000
- Deduction available: ₹10,000
- Remaining interest forming part of taxable income: ₹6,000
If Rahul earns only ₹7,000 as eligible savings interest, the deduction would be limited to ₹7,000.
What is Section 80TTB?
Section 80TTB provides a higher deduction on interest income specifically to resident senior citizens.
A senior citizen can claim a deduction equal to the eligible interest income or ₹50,000, whichever is lower.
Who can claim deduction under Section 80TTB?
Section 80TTB is available to an individual who:
- Is a resident in India and
- Is 60 years of age or more at any time during the relevant financial year
Resident individuals aged 80 years or more are also covered by the definition of senior citizen for this purpose.
A non-resident senior citizen cannot claim the deduction under Section 80TTB.
Which interest income qualifies under Section 80TTB?
Unlike Section 80TTA, Section 80TTB is not restricted only to savings account interest. Eligible interest may include interest from deposits maintained with:
- Bank savings accounts
- Bank fixed deposits and other eligible deposits
- Co-operative societies engaged in banking
- Post office deposits
The total deduction across all eligible interest income is restricted to ₹50,000 for the financial year.
Example of Section 80TTB deduction
Suppose Meena, a resident individual aged 67 years, earns the following interest during FY 2025-26:
- Savings bank interest: ₹20,000
- Fixed deposit interest: ₹45,000
- Total eligible interest: ₹65,000
The maximum deduction available under Section 80TTB is ₹50,000. Therefore:
- Total eligible interest: ₹65,000
- Section 80TTB deduction: ₹50,000
- Balance interest forming part of taxable income: ₹15,000
Section 80TTA vs Section 80TTB
| Particulars | Section 80TTA | Section 80TTB |
|---|---|---|
| Eligible taxpayer | Individual or HUF not covered by Section 80TTB | Resident senior citizen aged 60 years or more |
| Maximum deduction | ₹10,000 | ₹50,000 |
| Savings account interest | Eligible | Eligible |
| Fixed deposit interest | Not eligible | Eligible, subject to conditions |
| Post office deposit interest | Eligible where it is qualifying savings account interest | Eligible on qualifying deposits |
| Available under new tax regime? | No | No |
Are Sections 80TTA and 80TTB available under the New Tax Regime?
No. For AY 2026-27, the new tax regime under Section 115BAC is the default tax regime for eligible taxpayers.
Most deductions under Chapter VI-A are not permitted while calculating income under the new tax regime. Therefore, deductions under Sections 80TTA and 80TTB are generally available only where the taxpayer is eligible for and opts for the old tax regime.
Important: Interest income itself must still be reported in the Income Tax Return even if you are under the new tax regime and cannot claim a deduction under Section 80TTA or 80TTB.
How does myITreturn calculate Section 80TTA and 80TTB deductions?
You do not need to separately calculate and manually enter the deduction while filing through myITreturn.
When you enter your interest income while preparing your Income Tax Return, myITreturn automatically checks the relevant information and calculates the applicable deduction under Section 80TTA or Section 80TTB, wherever you are eligible.
The calculation takes into account factors such as:
- Your age
- Your residential status, wherever relevant
- The type and amount of interest income reported
- Whether the interest qualifies for Section 80TTA or Section 80TTB and
- The tax regime selected for the return
Filing your ITR through myITreturn?
Simply report your interest income correctly. Where eligible, myITreturn automatically calculates the applicable deduction under Section 80TTA or Section 80TTB and considers it in your tax computation.
Should interest income be reported before claiming the deduction?
Yes. The gross eligible interest income should first be reported under the appropriate income schedule in the ITR.
The eligible deduction under Section 80TTA or Section 80TTB is then claimed separately while computing total income. Taxpayers should not simply report the net interest after reducing the deduction.
For example, if a taxpayer earns ₹18,000 of eligible savings interest and is entitled to a ₹10,000 deduction under Section 80TTA:
- Interest income to be reported: ₹18,000
- Section 80TTA deduction: ₹10,000
Deposits held by a Firm, AOP or BOI
A special restriction applies where the relevant deposit is held by or on behalf of a firm, Association of Persons (AOP) or Body of Individuals (BOI).
Where interest is derived from such a deposit, the partner or member cannot separately claim the deduction under Section 80TTA or Section 80TTB in respect of that interest merely because the income is allocated to them.
Section 80TTB deduction and TDS on Interest are different
The deduction available under Section 80TTB should not be confused with the threshold for deduction of tax at source (TDS) on interest.
For FY 2025-26, under Section 194A, the threshold for specified banks, co-operative banks and post offices to deduct TDS on interest is generally:
- ₹1,00,000 for senior citizens and
- ₹50,000 for other taxpayers
These are TDS thresholds. They do not change the maximum deduction available under Section 80TTB, which remains ₹50,000.
Similarly, the fact that no TDS has been deducted does not mean that the interest is exempt from tax. The complete interest income should still be considered while filing the ITR.
Common mistakes to avoid
- Claiming Section 80TTA deduction on fixed deposit interest.
- Claiming both Section 80TTA and Section 80TTB for the same taxpayer.
- Claiming Section 80TTB as a non-resident senior citizen.
- Claiming Section 80TTA or 80TTB while computing income under the new tax regime.
- Reporting only the interest remaining after deduction instead of reporting gross interest income.
- Assuming that interest is tax-free merely because the bank has not deducted TDS.
- Confusing the ₹1,00,000 TDS threshold applicable to certain senior citizen interest payments with the ₹50,000 deduction limit under Section 80TTB.
Frequently Asked Questions
1. What is the maximum deduction available under Section 80TTA?
The maximum deduction is ₹10,000. If eligible savings interest is below ₹10,000, the deduction is limited to the actual eligible interest.
2. What is the maximum deduction available under Section 80TTB?
A resident senior citizen can claim eligible interest income up to a maximum deduction of ₹50,000.
3. Can a senior citizen claim both Section 80TTA and Section 80TTB?
No. A senior citizen covered by Section 80TTB cannot claim Section 80TTA for the same purpose.
4. Is fixed deposit interest covered under Section 80TTA?
No. Section 80TTA applies to qualifying savings account interest and specifically excludes time deposits such as fixed deposits.
5. Is fixed deposit interest covered under Section 80TTB?
Yes. Eligible interest on deposits, including qualifying bank fixed deposits, can be considered under Section 80TTB for a resident senior citizen, subject to the overall deduction limit of ₹50,000.
6. Can an NRI senior citizen claim Section 80TTB?
No. Section 80TTB applies to a resident individual who is aged 60 years or more during the relevant financial year.
7. Are Section 80TTA and Section 80TTB available under the new tax regime?
No. These deductions are generally not available where income is computed under the new tax regime under Section 115BAC.
8. Do I need to manually calculate Section 80TTA or 80TTB on myITreturn?
No. When you correctly enter your interest income in myITreturn, the applicable deduction under Section 80TTA or Section 80TTB is automatically calculated wherever you are eligible and considered in the tax computation.
9. If the bank has not deducted TDS, do I still need to report the interest?
Yes. The TDS threshold and taxability of interest are separate concepts. Interest income should be reported in the ITR even where no TDS has been deducted.
Quick Summary
| Section | Who can claim? | Eligible interest | Maximum deduction |
|---|---|---|---|
| 80TTA | Eligible individual/HUF not covered by 80TTB | Qualifying savings account interest | ₹10,000 |
| 80TTB | Resident senior citizen aged 60+ | Interest on qualifying deposits, including savings and fixed deposits | ₹50,000 |
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