As per the Income Tax Act of 1961, Section 80TTA – Deduction in respect of interest on deposits in savings account states that-
(1) Where the gross total income of an assesse 2 [(other than the assessee referred to in section 80TTB)], being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) in a savings account with—
(a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
(c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),
there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee a deduction as specified hereunder, namely:—
(i) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and
(ii) in any other case, ten thousand rupees.
(2) Where the income referred to in this section is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
Explanation — For the purposes of this section, “time deposits” means the deposits repayable on expiry of fixed periods.
Eligibility for Section 80TTA
Available only to individuals and Hindu Undivided Families (HUFs).
- Senior citizens (aged 60 or above) cannot claim this deduction under Section 80TTA. Instead, they can avail a higher tax benefit under Section 80TTB for interest income from deposits.
- This clarifies that while general taxpayers and HUFs can use 80TTA for savings account interest (up to ₹10,000), senior citizens must use 80TTB (which offers a ₹50,000 deduction on interest from all types of deposits).
Types of Interest Income Eligible for 80TTA Deduction
One can claim a deduction under Section 80TTA for interest earned from:
- Bank Savings Accounts (held with any recognized bank).
- Co-operative Society Savings Accounts (if the society operates as a bank).
- Post Office Savings Accounts (under the Post Office Savings Scheme).
Note: Interest from fixed deposits (FDs), recurring deposits (RDs), or other investments does not qualify for this deduction.
Interest Income Not Eligible for 80TTA Deduction
The Section 80TTA deduction does not apply to the following types of interest income:
- Fixed Deposits (FDs) – Interest from bank/post office/corporate FDs.
- Recurring Deposits (RDs) – Interest earned on RDs with banks or post offices.
- Corporate Bonds/Debentures – Interest from bonds, debentures, or debt funds.
- Provident Fund (PF) Deposits – Interest from EPF, PPF, or other PF schemes.
- Lending/Money-Lending Businesses – Interest earned from private or business loans.
Deduction Limit (FY 2024-25)
- Maximum Deduction: ₹10,000 per financial year (combined across all eligible accounts).
- If interest ≤ ₹10,000: Full amount is deductible.
- If interest > ₹10,000: Only ₹10,000 can be claimed; the remaining amount is taxable.
Important: You must add up interest from all savings accounts (banks, co-operative societies, and post offices) to determine eligibility.
How to Claim ?
- When filing your Income Tax Return (ITR), you need to report the interest income earned from your savings accounts under the head “Income from Other Sources”.
- Then, you can claim the deduction under Section 80TTA in the appropriate section of the ITR form.
Example
| Total Savings Interest = ₹8,000 → Full ₹8,000 deductible. Total Savings Interest = ₹15,000 → ₹10,000 deductible, ₹5,000 taxable. |
Key Considerations
Tax Regime Applicability
- Available only under the old tax regime.
- Not allowed if you opt for the new tax regime (default from FY 2023-24).
Documentation
- No investment proof required—deduction is based on actual interest earned.
- Ensure proper reporting in ITR under “Income from Other Sources.”
NRE vs. NRO Accounts
- NRE Account Interest: Tax-exempt in India (no deduction needed).
- NRO Account Interest: Taxable, but eligible for 80TTA deduction (up to ₹10,000)
Here, NRE – Non-Resident External, NRO – Non-Resident Ordinary)
FAQs
To claim tax benefits under Section 80TTA, you should maintain:
1.Bank Statements – Showing interest credited to your savings account.
2.Interest Certificates – If issued by your bank (not mandatory but helpful).
3.Passbook Entries – Updated passbook reflecting interest earnings.
Section 80TTA is exclusively for taxpayers below 60 years, allowing a ₹10,000 deduction on savings account interest, while senior citizens (60+) must use Section 80TTB for a ₹50,000 deduction on interest from all deposits – both provisions apply only to interest income, not the principal amount, and cannot be claimed simultaneously.
Savings account interest enjoys a ₹3,500 exemption per bank under Section 10(15)(i) in both tax regimes, while the larger ₹10,000 deduction under Section 80TTA is only available under the old regime – meaning new regime filers can only claim the basic ₹3,500 per-bank exemption, not the additional 80TTA benefit.
For claiming Section 80TTA deduction, declare your savings account interest under “Income from Other Sources” in your ITR and specify the deduction amount (up to ₹10,000). While no documents need to be submitted, maintain bank statements or interest certificates as supporting evidence in case of assessment.