Can You Claim 80TTA Deduction for FD Interest? Explained
- PRITI SIRDESHMUKH
- Dec 19, 2025
- 9 min read
Fixed deposit interest does not qualify for any deduction under Section 80TTA of the Income Tax Act. This provision is restricted to interest earned from savings bank accounts and offers a maximum deduction of ₹10,000, but only under the old tax regime and only for individuals and HUFs below 60 years of age. FD interest continues to be fully taxable at slab rates under “Income from Other Sources,” while senior citizens may claim relief through Section 80TTB. Understanding this distinction is essential for accurate reporting and preventing claim-related errors during ITR filing, especially as AIS and bank records increasingly capture interest details with precision.
Section 80TTA applies solely to savings interest. FD interest, regardless of amount, tenure, or TDS deductions, remains taxable without any 80TTA benefit.
Table of Contents
Eligibility for Section 80TTA Deduction
Section 80TTA is designed for individuals and Hindu Undivided Families below the age of 60. The deduction applies only to savings account interest from banks, co-operative societies, and post offices. NRIs can also be eligible, but only for savings interest in NRO accounts, as NRE savings interest is already tax-exempt. The deduction is capped at ₹10,000 in total, even if savings interest is earned across multiple banks. This relief is available exclusively under the old tax regime; taxpayers opting for the default new regime cannot claim it.
Can 80TTA Be Claimed on FD Interest?
Section 80TTA does not extend to fixed deposits or recurring deposits. FD interest is fully taxable and must be reported under “Income from Other Sources.” Forms such as 15G or 15H may prevent TDS if income is below the taxable threshold, but they do not convert FD interest into savings interest nor make it eligible for the 80TTA deduction.
How FD Interest Is Taxed Under “Income From Other Sources”
Interest earned on fixed deposits is added to annual taxable income and taxed at slab rates. Banks deduct TDS once interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). Even if TDS is deducted, the remaining FD interest must be reported in the ITR. Form 26AS, AIS, and TIS capture bank-reported interest, making omission likely to trigger mismatch notices. FD income remains outside the scope of 80TTA and is not eligible for any special deduction for non-senior individuals.
How to Claim Section 80TTA in ITR
Savings interest must be added to taxable income under “Income from Other Sources” first. After disclosure, a deduction up to ₹10,000 can be claimed under Chapter VI-A in the 80TTA field. If savings interest is less than ₹10,000, the lower amount must be claimed. If interest exceeds ₹10,000, only ₹10,000 is permitted. FD interest should never be entered in the 80TTA section, as doing so may invite a notice for excess deduction.
Is Section 80TTA Allowed in the New Tax Regime?
Section 80TTA is not available under the new tax regime. All Chapter VI-A deductions, except a few limited categories such as NPS employer contributions, are excluded. Taxpayers choosing the new regime cannot reduce their income using 80TTA, even if substantial savings interest is earned during the financial year.
How 80TTA Works in the Old Tax Regime
Under the old regime, 80TTA allows a deduction up to ₹10,000 from savings account interest. This applies regardless of the number of accounts or banks. The deduction is not per account but cumulative. Interest must be reported accurately, and excess amounts beyond ₹10,000 remain fully taxable. Only individuals and HUFs below 60 years can claim it; senior citizens receive broader coverage under 80TTB.
Section 80TTA vs Section 80TTB (Senior Citizens)
Section 80TTB is available exclusively to senior citizens aged 60 years and above. It offers a deduction up to ₹50,000 and covers interest from savings accounts, fixed deposits, and recurring deposits. This makes 80TTB significantly more beneficial than 80TTA. Non-senior individuals cannot claim 80TTB, and senior citizens cannot claim 80TTA because the law restricts them to the 80TTB provision alone.
Claiming FD Interest in ITR: Step-by-Step
Collect interest details from AIS, TIS, bank statements, and Form 26AS.
Add the entire FD interest amount under “Income from Other Sources.”
Apply slab taxation without attempting any 80TTA deduction.
Verify whether TDS has been deducted and adjust tax liability accordingly.
Reconcile reported interest with AIS to avoid mismatch or underreporting notices.
This process ensures correct reporting and prevents errors that often lead to tax notices.
Common Errors When Claiming 80TTA
Common errors when claiming the 80TTA deduction usually come from misunderstanding which types of interest qualify and how the Income Tax Department validates reported figures. One of the most frequent mistakes involves claiming 80TTA on interest earned from fixed deposits or recurring deposits. These instruments fall outside the scope of the provision, yet many taxpayers mistakenly consider them part of savings-related income. Such claims get flagged easily because AIS and bank-reported data clearly differentiate savings interest from FD and RD interest.
Another recurring issue is entering savings account interest directly under the deductions section in the ITR without first reporting it as income. The law requires savings interest to be added under “Income from Other Sources” and only then deducted under Section 80TTA. Skipping the income disclosure and only claiming the deduction creates a mismatch and may trigger a defective return notice.
Taxpayers also tend to claim more than the permissible limit of ₹10,000. Since the deduction applies to the total savings interest across all accounts, not per account, claiming a higher figure becomes an over-deduction. The excess stands out during automated assessments, especially now that AIS consolidates interest data from multiple banks.
Another common misunderstanding is the belief that the new tax regime allows 80TTA deductions. The new regime disallows most Chapter VI-A deductions, including 80TTA, regardless of how much savings interest is earned. Claiming it under the new regime results in immediate rejection during processing.
Incorrectly mixing NRE savings interest with taxable savings interest is another mistake often observed among NRIs. Interest from NRE accounts is tax-exempt, so it cannot be claimed under 80TTA. Only NRO savings interest qualifies, and taxpayers must ensure they are not combining exempt and taxable categories.
Many taxpayers also report only the TDS-based interest instead of the entire interest credited during the year. Banks deduct TDS only when interest crosses threshold limits, but the taxpayer must still report the actual interest accrued, regardless of TDS. Relying only on the TDS amount leads to underreporting, which is easily spotted as AIS provides the full interest amount.
These mistakes frequently lead to mismatches, defective return notices, or adjustments under Section 143(1), making accurate reporting essential.
Savings Accounts Eligible for 80TTA Deduction
Only interest from savings accounts maintained with banks, post offices, or co-operative societies qualifies. Accounts linked to overdrafts, current accounts, or sweep-in FD structures are excluded. Wallet balances, NRE accounts, and investment apps do not qualify as savings accounts under Section 80TTA.
Impact of 15G/15H on FD Interest and 80TTA Eligibility
Submission of Form 15G or 15H only prevents or reduces bank-level TDS deduction. These forms do not change the nature of the income. FD interest remains taxable at slab rates and remains ineligible for 80TTA. Senior citizens submitting Form 15H must still use Section 80TTB for eligible interest relief, not 80TTA.
How TaxBuddy Helps Ensure Correct Interest Reporting
Interest income often appears fragmented across banks, statements, AIS, and 26AS. This increases the likelihood of misreporting. TaxBuddy’s automated system identifies savings interest eligible for 80TTA, separates FD interest, and maps both to the correct sections of the ITR. The platform also highlights AIS mismatches and prevents excess deduction claims, reducing the chances of scrutiny notices.
Conclusion
Understanding the limits of Section 80TTA helps avoid common mistakes while filing returns, particularly those involving savings interest and FD interest. Tools that identify eligible interest and separate taxable components simplify the process and ensure accuracy. For seamless reporting and dependable assistance, download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides both self-filing and expert-assisted ITR filing options. Users who prefer a do-it-yourself experience can rely on the platform’s automated data extraction, income categorisation, and error-flagging tools. Those who need personalised guidance or have complex tax situations can choose the expert-assisted plan, where tax professionals handle computation, deductions, and compliance. Both options ensure accurate filing and help reduce the risk of notices by matching income details with AIS, TIS, and Form 26AS.
Q. Which is the best site to file ITR? The best platform is one that combines accuracy, automation, and reliable support. While the official income tax e-filing portal remains the default option, many taxpayers prefer platforms that simplify the filing process with prefill, document upload, intelligent tax calculations, and automatic error checks. TaxBuddy is widely considered one of the most dependable choices because it not only enables self-filing but also offers expert-assisted plans, automated mismatch detection, and post-filing support for tax notices.
Q. Where to file an income tax return? Income tax returns can be filed through the government’s official portal at incometax.gov.in or through private tax platforms that offer guided filing and support. Many users choose platforms like TaxBuddy for their streamlined workflow, automated AIS and Form 26AS integration, and expert-backed validation. These platforms minimise manual entry, reduce filing errors, and provide dedicated assistance if any scrutiny or notice is issued later.
Q. Is FD interest eligible for deduction under Section 80TTA? No. FD interest is completely excluded from Section 80TTA. The provision strictly covers interest earned from savings bank accounts held with banks, co-operative societies, or post offices. Regardless of how much FD interest is earned or whether TDS is deducted, the entire amount must be reported as taxable income under “Income from Other Sources” without any relief from 80TTA.
Q. Can individuals under 60 claim any deduction on FD interest? Non-senior taxpayers do not receive any specific deduction on FD interest. The entire interest amount is added to taxable income and taxed at slab rates. While savings interest may qualify for 80TTA up to ₹10,000, FD interest—short-term or long-term—does not qualify for any deduction for individuals below 60 years of age.
Q. Do senior citizens get any benefit on FD interest? Yes. Senior citizens aged 60 years or above can claim a deduction under Section 80TTB, which allows up to ₹50,000 on total interest earned from savings accounts, fixed deposits, and recurring deposits. This provides broad relief compared to Section 80TTA, which applies only to savings interest and only for non-senior taxpayers. FD interest is specifically covered under 80TTB for eligible senior citizens.
Q. Is 80TTA available in the new tax regime? No. Section 80TTA is available only under the old tax regime. Taxpayers opting for the new regime under Section 115BAC cannot claim 80TTA deductions, even if they earn substantial savings interest during the financial year. This applies to all individuals and HUFs regardless of age.
Q. What happens if savings interest exceeds ₹10,000? The maximum deduction allowed under Section 80TTA is ₹10,000. If savings interest exceeds this amount across one or more accounts, only ₹10,000 can be claimed as a deduction. The balance interest must be reported as taxable income and will be taxed at slab rates. Accurate disclosure ensures alignment with AIS and avoids defective return notices.
Q. Can NRIs claim Section 80TTA? NRIs can claim Section 80TTA only on interest earned from NRO savings accounts. Interest earned on NRE savings accounts is already exempt from tax and therefore not eligible for deduction. FD interest in NRE or NRO accounts remains fully taxable for non-senior NRIs and cannot be claimed under 80TTA.
Q. Does filing Form 15G or 15H make FD interest eligible for 80TTA? No. Form 15G (for individuals under 60) and Form 15H (for senior citizens) only instruct banks not to deduct TDS if total income is below the taxable limit. These forms do not alter the nature of FD interest. FD interest remains fully taxable and continues to be ineligible under Section 80TTA, even when no TDS is deducted.
Q. What is the difference between 80TTA and 80TTB? Section 80TTA provides a deduction up to ₹10,000 on savings account interest for non-senior individuals and HUFs. It excludes FD and RD interest entirely. Section 80TTB, on the other hand, is available only to senior citizens and allows a deduction up to ₹50,000 on interest from savings accounts, fixed deposits, and recurring deposits. Senior citizens cannot claim 80TTA once they become eligible for 80TTB.
Q. How important is AIS while reporting interest income? AIS plays a critical role in ensuring accurate reporting of interest income. It consolidates information from banks, post offices, and other financial institutions, capturing savings interest, FD interest, and TDS details. Matching ITR data with AIS reduces the likelihood of mismatch notices, defective returns, and unnecessary scrutiny. Most platforms, including TaxBuddy, automatically reconcile AIS data to prevent errors and ensure precise claim of deductions such as 80TTA or 80TTB.
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