Section 80TTB: senior citizens can deduct up to Rs 50,000 of bank, post office and co-op deposit interest

A resident senior citizen who keeps money in bank fixed deposits, a post office account or a co-operative bank can deduct up to Rs 50,000 of that interest from taxable income under Section 80TTB of the Income Tax Act, 1961. The relief was inserted by the Finance Act 2018 (Act No. 13 of 2018), dated 29 March 2018, and it is one of the few deductions written specifically for the 60-plus age group. It is available only under the old tax regime.

For FY 2025-26 (assessment year 2026-27) the ceiling is unchanged at Rs 50,000, and the Income Tax Department's senior-citizen guidance for AY 2026-27 states the same Rs 50,000 limit. What trips people up is not the ceiling but the boundary - which deposits count, which do not, and how the Rs 50,000 interacts with the Section 194A TDS threshold, which is a different number altogether.

What the Section Says

Section 80TTB(1) applies where the gross total income of a senior citizen includes interest on deposits with one of three institution types: (a) a banking company to which the Banking Regulation Act, 1949 applies; (b) a co-operative society carrying on the business of banking, including a co-operative land mortgage or land development bank; or (c) a Post Office as defined in clause (k) of Section 2 of the Indian Post Office Act, 1898. Where that interest is Rs 50,000 or less in the aggregate, the whole of it is deductible; where it is more, the deduction is fifty thousand rupees and no more.

The Explanation defines a senior citizen as an individual resident in India aged sixty years or more at any time during the relevant previous year. Residence is required, so a non-resident aged 70 cannot claim it. And the age test is satisfied at any point in the year, so a taxpayer whose 60th birthday falls on 31 March 2026 qualifies for the whole of FY 2025-26.

Sub-section (2) closes a route around the cap: where the interest comes from a deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction is allowed to any partner or member. A deposit parked in a family AOP is not a way to multiply the Rs 50,000.

Section 80TTB also displaces Section 80TTA. Since the Finance Act 2018, Section 80TTA(1) excludes an assessee referred to in Section 80TTB, so a senior citizen takes Rs 50,000 under 80TTB and nothing under the Rs 10,000 savings-interest allowance. They differ in a second way: 80TTA covers savings accounts and expressly excludes time deposits, while 80TTB covers deposits generally, fixed deposits included.

Which Deposits Qualify, and Which Do Not

The section lists institutions, not products, and that is the test to apply. A savings account or term deposit with a scheduled bank, a co-operative bank deposit, and interest credited on a post office account all sit inside the three clauses of Section 80TTB(1). A Senior Citizens Savings Scheme account, paying 8.2 per cent for the July to September 2026 quarter, and a Post Office Monthly Income Scheme account at 7.4 per cent for the same quarter, are held with a post office or an authorised bank, so on the statutory wording their interest qualifies too.

Everything outside those three institution types is excluded. Interest on a company fixed deposit, an NBFC deposit, a debenture, a bond or a loan advanced to a relative is taxable in full with no 80TTB shelter, however similar the cash flow looks. As a Chapter VI-A deduction, it also cannot exceed the qualifying interest in gross total income.

Worked Example

Take Mrs Kulkarni, a resident aged 68, filing for FY 2025-26 under the old regime. Her pension from a former employer is Rs 6,00,000. Her deposit interest is Rs 1,45,000: Rs 98,400 from a Senior Citizens Savings Scheme balance of Rs 12,00,000 at 8.2 per cent, Rs 37,000 from a Post Office Monthly Income Scheme balance of Rs 5,00,000 at 7.4 per cent, and Rs 9,600 credited on a bank savings account.

Pension is taxable under the head salaries, so the old-regime standard deduction of Rs 50,000 brings that head down to Rs 5,50,000. Adding the Rs 1,45,000 of interest gives a gross total income of Rs 6,95,000, and Section 80TTB removes Rs 50,000 of it, leaving a total income of Rs 6,45,000. The old-regime slabs for a resident aged 60 or more but under 80 for AY 2026-27 are nil up to Rs 3,00,000, 5 per cent to Rs 5,00,000, 20 per cent to Rs 10,00,000 and 30 per cent above that, plus health and education cess at 4 per cent.

The deduction is worth Rs 10,400 to her: Rs 50,000 at her 20 per cent marginal rate plus 4 per cent cess. A senior citizen whose income peaks in the 5 per cent band saves Rs 2,600 on the same Rs 50,000; one in the 30 per cent band saves Rs 15,600. Run your own figures through the income tax calculator.

Old Regime Versus New Regime on the Same Numbers

The default regime under Section 115BAC does not allow Section 80TTB, but that does not automatically make the old regime better: the new regime answers with a standard deduction of Rs 75,000, wider slabs, and a Section 87A rebate of up to Rs 60,000 where total income does not exceed Rs 12,00,000 for FY 2025-26.

On Mrs Kulkarni's numbers the new regime reduces her pension to Rs 5,25,000 after the Rs 75,000 standard deduction, adds the same Rs 1,45,000 of interest and produces a total income of Rs 6,70,000 with no 80TTB. Tax at 5 per cent on the slice from Rs 4,00,001 to Rs 6,70,000 is Rs 13,500, which the Section 87A rebate extinguishes because her total income is well under Rs 12,00,000.

That is arithmetic, not a recommendation, and it flips above Rs 12,00,000 where the Section 87A rebate falls away. Compare the two with the old versus new regime calculator, and see our note on which deductions survive in the new regime.

Common Mistakes

Claiming 80TTB while filing under the default regime. For a non-business taxpayer the old regime is chosen in the return itself, on or before the due date under Section 139(1); miss that and the Rs 50,000 claim fails even though the interest is genuine.

Reading the Rs 50,000 deduction as a Rs 50,000 TDS exemption. Section 194A sets the threshold below which a bank, post office or co-operative bank need not deduct tax on interest paid to a senior citizen, and Budget 2025 raised that threshold to Rs 1,00,000. Tax deducted is a payment on account, recovered through the return: see the TDS calculator and the glossary entry on TDS.

Claiming Rs 10,000 under 80TTA on top of Rs 50,000. Section 80TTA(1) excludes an assessee referred to in Section 80TTB, so a combined claim of Rs 60,000 fails. The correct figure for a senior citizen is Rs 50,000.

Counting non-qualifying interest towards the Rs 50,000. Company deposits, NBFC deposits, debentures and bonds sit outside the three institution types in Section 80TTB(1), and scrutiny of a return usually starts from the Annual Information Statement, where those payments are reported under their own heads.

Overlooking the advance-tax relief. Section 208 requires advance tax where the estimated liability for the year is Rs 10,000 or more, but Section 207 relieves a resident senior citizen with no business or professional income from paying it, so interest under Sections 234B and 234C does not arise for such a taxpayer filing ITR-1 or ITR-2. The deduction itself runs off gross total income.

Filing Form 15H when tax is in fact payable. Form 15H is a declaration by a resident individual aged 60 or more for receipts to be paid without deduction of tax, and it fits only where the estimated tax on total income is nil. Separately, Section 194P exempts a resident aged 75 or more from filing a return where the only income is pension and interest from the same specified bank that pays that pension.

FAQ

Is the Section 80TTB limit Rs 50,000 for FY 2025-26?

Yes. The deduction is the whole of the qualifying interest where it does not exceed Rs 50,000 in the aggregate, and Rs 50,000 in any other case. The Income Tax Department's senior-citizen guidance for AY 2026-27 states the same limit.

Can I claim Section 80TTB under the new tax regime?

No. It is available only under the old regime. Under the default regime in Section 115BAC the deduction is not allowed, though the standard deduction is Rs 75,000 and the Section 87A rebate runs up to Rs 60,000 where total income does not exceed Rs 12,00,000.

Does fixed deposit interest count, or only savings interest?

Both. Section 80TTB covers interest on deposits with a banking company, a co-operative society carrying on banking or a post office, without the time-deposit exclusion that limits Section 80TTA to savings accounts and Rs 10,000.

I am 59 and turn 60 in March 2026. Can I claim it for FY 2025-26?

Yes. The Explanation to Section 80TTB requires the individual to be 60 or more at any time during the relevant previous year, so attaining that age on any date up to 31 March 2026 qualifies you for the full Rs 50,000 for FY 2025-26.

Does the bank stop deducting TDS once I have Rs 50,000 of interest?

No, the two thresholds are different. Section 80TTB caps the deduction at Rs 50,000, while Section 194A sets the TDS threshold, raised by Budget 2025 to Rs 1,00,000 for a senior citizen. Tax deducted is credited against the final liability computed in the return.

Does interest from a company fixed deposit qualify?

No. Section 80TTB(1) lists only a banking company under the Banking Regulation Act, 1949, a co-operative society carrying on the business of banking, and a Post Office under the Indian Post Office Act, 1898. Interest from a company or NBFC deposit is taxable in full and is reported in your income tax return under income from other sources.

Sources: Income Tax Department, Senior Citizens and Super Senior Citizens for AY 2026-27 and Salaried Individuals for AY 2026-27; bare text of Section 80TTB and Section 80TTA, Income Tax Act, 1961.