How much savings account interest is tax-free under Section 80TTA? Under Section 80TTA of the Income Tax Act 1961, individuals and HUFs can claim a deduction of up to Rs. 10,000 per year on interest earned from savings accounts with banks, cooperative societies, or post offices. This deduction is available only under the old tax regime. Resident senior citizens (60+) get a higher deduction of Rs. 50,000 under Section 80TTB, which also covers FD and RD interest (Sections 80TTA and 80TTB, Income Tax Act 1961; incometaxindia.gov.in).
If you earn interest on a savings account with any Indian bank, that income is taxable under "Income from Other Sources." Sections 80TTA and 80TTB of the Income Tax Act 1961 let you reduce this tax burden by claiming a deduction under Chapter VI-A of your ITR. This post covers which section applies to you, the exact deduction limits, what qualifies, how to claim it in your AY 2026-27 return, and what changes under the new Income Tax Act 2025.
Section 80TTA: Savings Interest Deduction for Individuals and HUFs
Section 80TTA applies to individuals and Hindu Undivided Families (HUFs), other than resident senior citizens (who use Section 80TTB). The rules are straightforward:
| Feature | Section 80TTA |
|---|---|
| Who can claim | Individuals (resident or non-resident) and HUFs, except resident individuals aged 60 or above |
| Maximum deduction | Rs. 10,000 a year |
| Eligible interest | Interest on savings accounts with a bank, a co-operative society engaged in banking, or a post office |
| Not covered | Interest on FDs, RDs and other time deposits |
| Regime | Old regime only |
What counts as a "savings account": Only interest from savings bank accounts qualifies. Interest from fixed deposits (FDs), recurring deposits (RDs), and other time deposits is excluded. The Act defines "time deposits" as deposits repayable on expiry of fixed periods (Explanation to Section 80TTA, Income Tax Act 1961).
Multiple savings accounts: If you hold savings accounts across several banks, add up the interest from all accounts. The Rs. 10,000 cap applies to the combined total, not per account.
Example: Rahul (age 35) earns Rs. 6,000 interest from his SBI savings account and Rs. 7,000 from his HDFC savings account in FY 2025-26. His total savings interest is Rs. 13,000. He claims Rs. 10,000 under Section 80TTA. The remaining Rs. 3,000 is taxable at his applicable slab rate.
Section 80TTB: Higher Limit for Senior Citizens
Section 80TTB is the senior-citizen counterpart of Section 80TTA: a resident individual aged 60 or above claims 80TTB instead of 80TTA. The two key differences: a higher limit and broader coverage of deposit types.
| Feature | Section 80TTB |
|---|---|
| Who can claim | Resident individuals aged 60 or above |
| Maximum deduction | Rs. 50,000 a year |
| Eligible interest | Interest on savings accounts, FDs and RDs with a bank, a co-operative society engaged in banking, or a post office |
| Regime | Old regime only |
Covers more than savings interest: Unlike 80TTA, Section 80TTB covers interest from fixed deposits, recurring deposits, and savings accounts. This matters because senior citizens often park retirement funds in bank FDs.
TDS threshold is higher than the deduction: From 1 April 2025 (Finance Act 2025), a bank, post office, or co-operative bank deducts TDS under Section 194A on interest to a senior citizen only if it exceeds Rs. 1,00,000 in the year. So a senior citizen can have interest above the Rs. 50,000 80TTB limit with no TDS, and the excess is still taxable.
Cannot claim both: If you are a senior citizen, you claim 80TTB only. You cannot claim 80TTA on savings interest and 80TTB on FD interest separately. Section 80TTA explicitly excludes assessees referred to in Section 80TTB. The Rs. 50,000 limit under 80TTB covers all deposit interest combined.
Example: Sunita (age 65) earns Rs. 20,000 from her SBI savings account, Rs. 35,000 from an SBI FD, and Rs. 8,000 from a Post Office RD in FY 2025-26. Her total deposit interest is Rs. 63,000. She claims Rs. 50,000 under Section 80TTB. The remaining Rs. 13,000 is taxable at slab rates.
80TTA vs 80TTB: Key Differences at a Glance
| Point | Section 80TTA | Section 80TTB |
|---|---|---|
| Who | Individuals and HUFs, except resident seniors | Resident individuals aged 60+ |
| Limit | Rs. 10,000 | Rs. 50,000 |
| Savings account interest | Yes | Yes |
| FD and RD interest | No | Yes |
| NRIs | Yes (for example NRO savings interest) | No |
| New regime | Not available | Not available |
Not Available Under the New Tax Regime
This is the most common point of confusion. Under Section 115BAC (new tax regime), which is the default for individuals and HUFs from AY 2024-25 onwards, neither Section 80TTA nor Section 80TTB can be claimed. Section 115BAC(2) shuts out all Chapter VI-A deductions other than Sections 80CCD(2), 80CCH(2) and 80JJAA.
If you opt for the new tax regime, all savings and deposit interest is fully taxable at slab rates with no deduction.
What this means practically:
- If your savings interest is below Rs. 10,000 and you have no other reason to choose the old regime, the new regime's lower slab rates may still result in lower overall tax.
- If your savings and FD interest is significant, particularly for senior citizens with Rs. 50,000+ in deposit interest, the old regime could save more through the 80TTB deduction than the new regime saves through lower slabs. The senior citizen tax benefits guide covers the other old-regime reliefs that stack with 80TTB.
Run the numbers for both regimes before deciding. The old vs new regime comparison has worked examples.
How to Claim in Your ITR (AY 2026-27)
Step 1: Identify your total interest income. Check your Annual Information Statement (AIS) on the Income Tax e-filing portal for interest credited by each bank. Cross-check with passbook entries or interest certificates.
Step 2: Report the full interest as income. In your ITR form (ITR 1, ITR 2, ITR 3, or ITR 4), report the total savings and deposit interest under "Income from Other Sources." Report the gross amount before any deduction.
Step 3: Claim the deduction under Chapter VI-A. In Schedule VI-A of your ITR:
- Non-senior citizens: enter the deduction under Section 80TTA (maximum Rs. 10,000)
- Senior citizens: enter the deduction under Section 80TTB (maximum Rs. 50,000)
Step 4: Verify against Form 26AS and AIS. Ensure the interest income you report matches the TDS certificates (Form 16A) and the AIS. Mismatches between reported income and AIS data trigger processing delays and potential notices.
Transition Under the Income Tax Act 2025
AY 2026-27 (FY 2025-26) is the last assessment year governed by Sections 80TTA and 80TTB of the Income Tax Act 1961. From the 2026-27 tax year onwards, the Income Tax Act 2025 consolidates both into Section 153, retaining the same deduction limits: Rs. 10,000 for non-senior individuals and HUFs on savings account interest (excluding time deposits), and Rs. 50,000 for resident senior citizens on deposits in any account, including time deposits (Section 153(2), Income Tax Act 2025).
Common Mistakes to Avoid
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Claiming 80TTA on FD interest. Section 80TTA covers only savings account interest. FD, RD, and other time deposit interest is excluded for non-senior citizens. If the Assessing Officer finds you claimed FD interest under 80TTA, the deduction will be disallowed.
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Claiming 80TTA or 80TTB under the new tax regime. The ITR utility will reject this. If you are filing under Section 115BAC, do not enter a value under 80TTA or 80TTB in Schedule VI-A.
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Not reporting interest below the TDS threshold. Even if no TDS was deducted on your interest (for example because it was below the Section 194A threshold, which from 1 April 2025 is Rs. 50,000 per bank, co-operative bank or post office for non-seniors and Rs. 1,00,000 for senior citizens), the interest is still taxable income and must be reported in your ITR. You then claim the 80TTA/80TTB deduction separately to reduce the taxable amount.
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Senior citizens claiming both 80TTA and 80TTB. Section 80TTA explicitly excludes assessees referred to in Section 80TTB. If you are 60 or above, claim only 80TTB. Do not split interest across both sections.
Tax Garden Handles This for You
Interest income, TDS reconciliation, and regime selection involve interlinked calculations. Tax Garden's compliance team handles your AIS, applies the correct deduction under 80TTA or 80TTB, and files your ITR according to your regime choice. Flat fee, no surprises.
Sources: Section 80TTA and Section 80TTB of the Income Tax Act 1961 (incometaxindia.gov.in); Section 80TTB inserted by the Finance Act 2018; Section 115BAC (deductions, including 80TTA and 80TTB, not available under the new tax regime); Section 194A TDS threshold of Rs. 1,00,000 for senior citizens and Rs. 50,000 for others on bank interest (Finance Act 2025, from 1 April 2025); Section 153 of the Income Tax Act 2025.
