Section 80TTA of Income Tax Act,1961: Deduction Rules & Eligibility

Introduction

The 80TTA of the Income Tax Act provides a deduction on interest earned from eligible savings accounts. Under the 80TTA of the Income Tax Act, eligible individuals and Hindu Undivided Families can claim a deduction of up to ₹10,000 on savings account interest earned from banks, post offices and eligible cooperative banks. The deduction does not apply to fixed deposits, recurring deposits, or other time deposits, and is available only under the old tax regime. From 1 April 2026, the corresponding provision is covered under Section 153 of the Income-tax Act, 2025.

In this article, we explain the eligibility, deduction limit, eligible interest income, NRI applicability, tax regime rules and the process to claim the deduction in the ITR.

What Is Section 80TTA Under Income Tax?

Section 80TTA of the Income Tax Act, 1961 provides a deduction for interest earned on deposits held in savings accounts. It is available to individuals and Hindu Undivided Families whose gross total income includes eligible savings account interest.

The deduction is calculated as the lower of:

• The actual eligible savings account interest; or
• ₹10,000 during the financial year.

For example, if a taxpayer earns ₹7,000 as savings account interest, the entire ₹7,000 may be claimed. If the interest is ₹16,000, the 80TTA deduction limit will remain ₹10,000, and the balance ₹6,000 will remain taxable.

The Income-tax Act, 2025 applies from 1 April 2026. However, returns for FY 2025-26, corresponding to AY 2026-27, continue to be filed under the Income-tax Act, 1961. Therefore, Section 80TTA of the income tax act remains applicable to those returns. For Tax Year 2026-27 onwards, the corresponding deduction is covered under Section 153.

Institutions Covered Under Section 80TTA

Interest earned from savings accounts maintained with the following institutions may qualify for the deduction:

1. Banks

Savings account interest earned from a banking company covered by the Banking Regulation Act, 1949 may qualify. This includes eligible public sector, private sector and foreign banks operating in India.

2. Post Offices

Interest earned from an Indian post office savings account may also qualify for the Section 80TTA of the income tax act deduction.

3. Cooperative Banks

The deduction may be claimed on savings account interest received from a cooperative society engaged in carrying on banking activities, including eligible cooperative banks.

The deduction applies to savings deposits and not to deposits repayable after a fixed period.

Section 80TTA Eligibility

The following taxpayers may claim the deduction, subject to the applicable conditions:

Individuals

An individual taxpayer may claim the deduction when eligible savings account interest forms part of their gross total income.

Resident senior citizens are generally covered under Section 80TTB instead of Section 80TTA of the Income tax act, 1961. Section 80TTB provides a deduction of up to ₹50,000 on eligible interest from savings and time deposits.

Hindu Undivided Families

A Hindu Undivided Family can claim the deduction on eligible savings account interest earned in the name of the HUF.

The interest does not need to remain below ₹10,000. When the interest exceeds ₹10,000, the HUF may claim a maximum deduction of ₹10,000, and the remaining amount will be taxable.

Non-Resident Indians

An NRI may claim the Section 80TTA deduction because the provision is not restricted only to resident taxpayers. Taxpayers should also understand the applicable rules for NRI income tax return filing in India.

In practice, the deduction generally applies to taxable interest earned from an NRO savings account. Interest earned from an NRE account may be exempt from tax when the prescribed conditions are satisfied. Since exempt income is not included in gross total income, a separate deduction under Section 80TTA of the income tax act is not claimed for such income.

Interest from an NRO fixed deposit or another time deposit is not eligible for deduction under Section 80TTA of the Income Tax Act, 1961.

Interest Income Eligible Under Section 80TTA

The following interest income may qualify:

• Interest from a bank savings account;
• Interest from a post office savings account;
• Interest from a savings account maintained with an eligible cooperative bank; and
• Eligible interest from multiple savings accounts.

The number of savings accounts does not affect eligibility. Interest from all eligible accounts must be combined while calculating the deduction.

Interest Income Not Eligible Under Section 80TTA

The following interest income does not qualify:

Fixed Deposit Interest

Interest earned from a fixed deposit is not covered because a fixed deposit is repayable after a specified period.

Recurring Deposit Interest

Interest earned from recurring deposits is not eligible for the Section 80TTA deduction.

Time Deposit Interest

Interest from any deposit repayable after a fixed period is excluded, regardless of whether the deposit is maintained with a bank, post office or cooperative bank.

Company Deposit Interest

Interest earned from deposits placed with companies or non-banking financial companies is not savings account interest and does not qualify.

Interest From Bonds and Debentures

Interest earned from bonds, debentures and similar securities is not eligible under Section 80TTA of the income tax act.

How to Claim Section 80TTA Deduction in the ITR

A taxpayer may claim the deduction by following these steps:

• Collect the interest certificates, account statements, or annual summaries for all savings accounts.
• Calculate the total interest received or credited during the relevant year.
• Report the entire savings account interest under “Income from Other Sources.”
• Claim the eligible amount under Section 80TTA in the Chapter VI-A deduction schedule.
• Restrict the deduction to the lower of the actual eligible interest or ₹10,000.

Section 80TTA is a deduction and not an exemption. Therefore, taxpayers should not exclude the interest directly while reporting income.

Difference Between Section 80TTA and Section 80TTB

Section 80TTB defines a senior citizen as a resident individual aged 60 years or more at any time during the relevant previous year.

For a detailed comparison of eligibility, deduction limits and eligible interest, read our guide on the difference between Section 80TTA and Section 80TTB.

Claim Section 80TTA Deduction With Ebizfiling

Ebizfiling can assist you with:

• Calculating eligible savings account interest;
• Checking the applicable deduction limit;
• Reviewing AIS, TIS and bank interest details;
• Determining whether the old tax regime is suitable;
• Reporting interest under “Income from Other Sources”; and
• Claiming the eligible deduction correctly in the ITR.

Get expert assistance with income tax return filing and deduction reporting through Ebizfiling.

Conclusion

The 80TTA of the Income Tax Act allows eligible individuals and HUFs to claim a deduction of up to ₹10,000 on interest earned from savings accounts. The deduction is available for eligible accounts held with banks, post offices, and cooperative banks, but it does not cover fixed deposits, recurring deposits, or other time deposits. Taxpayers must first report the entire interest income under “Income from Other Sources” and then claim the applicable Section 80TTA of the income tax act deduction. The deduction is available only under the old tax regime.

Suggested Reads:

Section 153 of the Income Tax Act

Frequently Asked Questions