Section 80TTA of the Income Tax Act, 1961, allows a deduction of up to ₹50,000 for interest income earned from savings deposits held in:
Banks
Post offices
Cooperative societies engaged in banking
Note: Interest received from fixed deposits, recurring deposits, and other time deposits is not eligible for deduction under this section.
As per Budget 2025:
Sections 80TTA and 80TTB have been merged into a unified provision.
The deduction limit has been increased from ₹10,000 to ₹50,000.
This merged section now applies to all eligible taxpayers, including senior citizens.
Each Individual and HUF is eligible for a Section 80TTA deduction.
Yes, NRIs are eligible for the Section 80TTA deduction as well. It is important to remember that in India, NRIs can only open two kinds of accounts. for example, NRE and NRO accounts. However, because interest received on NRE accounts is tax-free, only owners of NRO savings accounts are eligible to benefit from Section 80TTA.
Note: Senior citizens can now also claim this deduction under the merged provision.
You are eligible to deduct interest income from the following sources:
From a savings account with a bank.
From a savings account with a co-operative society carrying on the business of banking.
From a savings account with a post office.
The following situations will not qualify for the Section 80TTA deduction:
Interest from fixed deposits.
Interest from recurring deposits.
Time deposits mean deposits repayable on the expiry of fixed periods.
Interest earned on corporate bonds and debentures.
Interest from Provident fund deposits.
Interest from lending business.
The maximum deduction allowed is ₹50,000. If your total eligible interest income is less than this limit, you can claim the actual amount. If it exceeds, your deduction is capped at ₹50,000.
Note: You must calculate the total interest from all eligible accounts before claiming the deduction.
First, in your return, tally up all of your interest income under the heading "Income from Other Sources." Determine your whole gross income for the fiscal year by adding up all of your revenue sources, and then declare it as a Section 80TTA deduction.
Important: Section 80TTA is only available under the old tax regime. You must opt out of the new regime to claim this deduction.
As an illustration:
If Mr. A has a salary of ₹ 5,00,000, his interest income for a bank savings account is ₹ 5,000, and his interest income for fixed deposits is ₹ 15,000 for the entire fiscal year. In addition, there is a ₹ 10,000 deduction that qualifies under Section 80C. Then, under the previous tax system, taxable income would be calculated as follows:-
Taxable income under old regime:
| Particulars | Amount (₹) |
|---|---|
| Income from Salary | 5,00,000 |
| Less: Standard Deduction | 50,000 |
| Net Salary | 4,50,000 |
| Income from Other Sources: | |
| - Savings Interest | 5,000 |
| - Fixed Deposit Interest | 15,000 |
| Gross Total Income | 4,70,000 |
| Less: Chapter VI-A Deductions | |
| - 80C | 10,000 |
| - 80TTA (merged, max 50,000) | 5,000 |
| Taxable Income | 4,55,000 |
No. Only savings account interest is eligible under this section.
Yes, Savings interest from cooperative banks is eligible.
No. The limit is on the total interest income, not the number of accounts.
Yes, it must be reported under "Income from Other Sources."
No. Since Budget 2025 merged both sections, only the unified deduction of ₹50,000 is now applicable.
Failure to report interest income may attract penalties and interest during assessment.