80TTA vs 80TTB: Which Interest Deduction Applies to You
- Rajesh Kumar Kar
- 2 days ago
- 8 min read
Sections 80TTA and 80TTB of the Income Tax Act, 1961, help reduce tax on interest income from savings and deposits. While both sections aim to ease the tax burden, their eligibility differs—80TTA applies to individuals and HUFs below 60, whereas 80TTB benefits senior citizens with higher deduction limits. Both are valid only under the old tax regime. For taxpayers seeking clarity, understanding which section applies is crucial to avoid missed deductions or ineligible claims during return filing.
Table of Contents
Understanding Section 80TTA and 80TTB
Sections 80TTA and 80TTB of the Income Tax Act, 1961, provide deductions on interest income earned from savings accounts and deposits. These sections are designed to provide relief from tax on small interest earnings, encouraging individuals—especially senior citizens—to save more. Section 80TTA applies to individuals (other than senior citizens) and Hindu Undivided Families (HUFs), while Section 80TTB specifically caters to resident senior citizens aged 60 years and above. Both deductions reduce taxable income by allowing a fixed exemption limit on interest earned during a financial year.
Key Differences Between 80TTA and 80TTB
The primary difference lies in eligibility and the amount of deduction allowed. Section 80TTA provides a deduction of up to ₹10,000 per year on interest earned from savings accounts held in banks, cooperative societies, or post offices. In contrast, Section 80TTB allows a higher deduction—up to ₹50,000 per year—on interest income earned by senior citizens, including from savings accounts, fixed deposits, and recurring deposits. Another distinction is that 80TTA excludes interest from term deposits, while 80TTB includes it.
Who Can Claim Section 80TTA Deduction?
Section 80TTA applies to individual taxpayers below 60 years of age and HUFs. To qualify, the savings account must be maintained with a bank, cooperative society, or post office. The total deduction limit is capped at ₹10,000, irrespective of the number of accounts held. However, the deduction is available only for savings account interest, not for fixed or recurring deposit interest. Non-resident Indians (NRIs) can claim this benefit only for savings accounts held in Indian banks, not for NRO or NRE deposits.
Who Can Claim Section 80TTB Deduction?
Section 80TTB is meant exclusively for resident senior citizens aged 60 years or above. The deduction is available on total interest income from savings accounts, fixed deposits, and recurring deposits, up to ₹50,000 per financial year. This higher limit provides significant relief for retirees who rely on interest income as a regular source of earnings. Unlike 80TTA, the 80TTB deduction can also be claimed for interest earned from deposits in both banks and cooperative banks, including post offices.
Is 80TTA or 80TTB Allowed in the New Tax Regime?
Under the new tax regime introduced under Section 115BAC, most deductions and exemptions, including those under Sections 80TTA and 80TTB, are not available. Taxpayers who opt for the old regime can claim these benefits, but those choosing the new regime will not be eligible for these deductions. Therefore, individuals with higher interest income—especially senior citizens—may find the old regime more beneficial due to these tax-saving options.
How to Claim Deduction Under Section 80TTA in ITR
To claim Section 80TTA, the taxpayer must first report the total interest income under the head “Income from Other Sources.” After calculating the total interest earned, a deduction of up to ₹10,000 can be claimed under Section 80TTA in the “Deductions” section of the ITR form. The deduction should not exceed the total reported interest income. Supporting documents like bank interest certificates or passbook entries should be retained for verification in case of scrutiny.
How to Claim Deduction Under Section 80TTB in ITR
For senior citizens, the deduction under Section 80TTB can be claimed similarly under the “Deductions” section of the ITR. The total interest income from all savings and deposit accounts should be reported under “Income from Other Sources.” A maximum of ₹50,000 can then be claimed as a deduction. The total amount must match the bank-provided interest certificates and the information reflected in the Annual Information Statement (AIS). Proper documentation ensures accuracy and avoids mismatches during processing.
Impact of TDS on Interest Income Deductions
Banks deduct tax at source (TDS) on interest income exceeding ₹40,000 for regular taxpayers and ₹50,000 for senior citizens in a financial year under Section 194A. Even if TDS is deducted, taxpayers can still claim deductions under 80TTA or 80TTB to reduce their taxable income. If total income is below the taxable limit, taxpayers can submit Form 15G (for individuals) or Form 15H (for senior citizens) to avoid TDS deduction altogether. It’s essential to reconcile TDS entries with Form 26AS before filing the return.
80TTA vs 80TTB: Examples and Calculation Scenarios
Example 1: A 45-year-old individual earns ₹12,000 as interest from a savings account. They can claim a deduction of ₹10,000 under Section 80TTA, making only ₹2,000 taxable. Example 2: A 67-year-old retiree earns ₹45,000 from savings and ₹30,000 from fixed deposits. They can claim up to ₹50,000 under Section 80TTB, effectively exempting their entire interest income. These examples highlight how senior citizens gain greater tax relief compared to younger taxpayers through Section 80TTB.
Common Mistakes to Avoid While Claiming These Deductions
A frequent mistake taxpayers make when claiming deductions under sections like 80TTA or 80TTB is not accounting for the total interest income from all savings accounts before claiming the deduction. This often leads to underreporting of income, which can result in discrepancies between the information in the Income Tax Return (ITR) and the data available in the Annual Information Statement (AIS) or Form 26AS. The Income Tax Department can flag such mismatches, leading to unnecessary scrutiny or even a notice.
Another common error is claiming deductions under both Section 80TTA and Section 80TTB at the same time. Taxpayers must remember that these sections are mutually exclusive — 80TTA applies to individuals below 60 years, while 80TTB applies only to senior citizens. If both are claimed together, the deduction will likely be disallowed during assessment.
A third mistake is claiming 80TTA for interest earned from fixed deposits or recurring deposits. Section 80TTA strictly covers interest from savings bank accounts only — whether from a bank, cooperative society, or post office. Interest from time deposits like FDs or RDs does not qualify and must instead be reported as ‘Income from Other Sources.’
To prevent these issues, taxpayers should carefully verify their total interest income across all accounts before filing. Checking details from bank statements and reconciling them with Form 26AS or AIS ensures accuracy. Maintaining a clear record of interest income and applicable deductions not only prevents errors but also supports smooth, error-free tax filing and helps avoid future disputes with the Income Tax Department.
How TaxBuddy Helps You Claim Eligible Deductions Automatically
TaxBuddy simplifies deduction claims by automatically identifying eligible interest income and applying the correct limits under Sections 80TTA and 80TTB. The platform cross-verifies entries with Form 26AS, AIS, and uploaded bank details to ensure there are no mismatches. Its AI-driven interface minimises manual errors and helps both regular taxpayers and senior citizens claim the maximum deductions possible. Expert-assisted filing further ensures compliance with all applicable tax laws.
Conclusion
Understanding Sections 80TTA and 80TTB helps taxpayers save tax efficiently on their interest income while staying compliant. Choosing the correct section based on age and income type ensures maximum relief. With structured reporting and platforms like TaxBuddy, filing becomes simple, transparent, and error-free.
For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Can both Section 80TTA and 80TTB be claimed in the same financial year?
No, a taxpayer cannot claim both deductions together. Section 80TTA is applicable to individuals below 60 years and Hindu Undivided Families (HUFs), allowing up to ₹10,000 deduction on savings account interest. Section 80TTB, on the other hand, applies exclusively to senior citizens aged 60 years and above, allowing up to ₹50,000 deduction on both savings and fixed deposit interest. Therefore, an individual can claim only one of these based on their age and eligibility.
Q2. Is Section 80TTA applicable to NRI accounts?
NRIs can claim a deduction under Section 80TTA only on savings accounts maintained in Indian banks or post offices. However, interest earned on Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts does not qualify. NRE account interest is fully exempt, while NRO account interest is fully taxable without the 80TTA benefit. Hence, only resident individuals can fully utilise the Section 80TTA deduction benefit.
Q3. Does Section 80TTB apply to joint accounts?
Yes, senior citizens who hold joint accounts are eligible to claim a deduction under Section 80TTB, but only for the portion of interest corresponding to their ownership share in the account. The interest income must be reflected in the senior citizen’s bank statement and taxable income to qualify for a deduction. The co-holder who is not a senior citizen cannot claim 80TTB benefits on the same account.
Q4. Can interest from post office savings accounts be claimed under these sections?
Yes, interest earned from post office savings accounts qualifies for deduction under Section 80TTA (for individuals below 60 years) or Section 80TTB (for senior citizens). However, post office term deposit interest is not eligible. It’s important to note that up to ₹10,000 of interest from post office savings accounts is already exempt under Section 10(15)(i), and only the balance, if any, can be considered for deduction.
Q5. What happens if total interest income is less than ₹10,000 or ₹50,000?
If the interest earned during the financial year is lower than the maximum limit, only the actual amount earned can be claimed as a deduction. For instance, if a taxpayer earns ₹8,000 interest in a year, the deduction will be ₹8,000 and not the full ₹10,000 limit under 80TTA. Similarly, for senior citizens, if the total interest is ₹40,000, the deduction under 80TTB will be ₹40,000 and not ₹50,000.
Q6. Are recurring deposits covered under 80TTA?
No, recurring deposits (RDs) and fixed deposits (FDs) are not covered under Section 80TTA. The section only applies to savings account interest. However, for senior citizens, Section 80TTB extends the benefit to include interest from fixed deposits and recurring deposits in banks, cooperative banks, and post offices. This makes 80TTB broader in scope for retirees.
Q7. Can both spouses claim deduction on joint accounts?
Yes, if both spouses are eligible and the interest income is divided in proportion to their contributions, each can claim the deduction separately. For instance, if both spouses jointly maintain a savings account and the interest is ₹12,000, and both have contributed equally, they can claim ₹6,000 each under 80TTA (if below 60) or 80TTB (if both are senior citizens). Proper documentation of contributions and bank statements should be maintained for verification.
Q8. Is TDS applicable even after claiming 80TTA or 80TTB?
Yes, Tax Deducted at Source (TDS) can still be applicable even if you claim these deductions. Banks deduct TDS on interest income exceeding ₹40,000 (₹50,000 for senior citizens) under Section 194A. The deduction under Section 80TTA or 80TTB reduces your taxable income but does not exempt you from TDS. Taxpayers can claim a refund for excess TDS while filing their ITR.
Q9. Can these deductions be claimed under the new tax regime?
No, deductions under Sections 80TTA and 80TTB are not available under the new tax regime introduced under Section 115BAC. Taxpayers opting for the new regime must forgo most exemptions and deductions. Hence, individuals who wish to claim these deductions must choose the old tax regime while filing their ITR.
Q10. Are cooperative bank deposits eligible for 80TTB deduction?
Yes, senior citizens can claim deductions under Section 80TTB for interest earned from deposits with cooperative banks, up to ₹50,000 annually. This includes both fixed and recurring deposits with such institutions. However, individuals below 60 years cannot claim any benefit for cooperative bank deposits under Section 80TTA.
Q11. Can the deduction be claimed for multiple bank accounts?
Yes, taxpayers can aggregate the total interest earned from all eligible savings accounts across different banks or post offices and claim a combined deduction under Section 80TTA or 80TTB, up to their respective limits. It’s important to report all interest income accurately in the ITR to avoid discrepancies with the AIS (Annual Information Statement).
Q12. How does TaxBuddy ensure accurate deduction claims?
TaxBuddy’s AI-powered filing system automatically identifies and applies eligible deductions like 80TTA and 80TTB based on the user’s age and bank interest details. The platform cross-verifies data from Form 26AS, AIS, and uploaded documents to ensure that only valid deductions are applied. Expert-assisted plans include a final review by tax professionals, ensuring maximum savings with zero compliance risk.
