Section 153, Income-tax Act 2025: Deduction for interest on deposits

What changed when 80TTA and 80TTB became Section 153?

The money did not change; two sections became one. Under the 1961 Act, Section 80TTA gave individuals below 60 and HUFs a ₹10,000 deduction on savings-account interest, while Section 80TTB gave resident senior citizens a separate ₹50,000 deduction that also reached fixed and recurring deposits. The 2025 Act folds both into a single Section 153, titled "Deduction for interest on deposits", and keeps the two limits intact as separate limbs of one provision.

For anyone under 60, nothing about the benefit moves: still ₹10,000, still savings-account interest only, still old-regime only. What is new is that seniors and non-seniors now read the same section, and you look up your limb by age. The change applies from tax year 2026-27, the first year the 2025 Act is in force.

Section 153, its title "Deduction for interest on deposits", and its consolidation of the old 80TTA and 80TTB are cross-checked against published copies of the enacted Act.†

Who can claim the deduction, and on which limit?

Individuals and HUFs, on the old regime, with your age deciding the limit. The section recognises three claimants: an individual who is not a senior citizen, a resident senior citizen, and an HUF. The under-60 individual and the HUF share the ₹10,000 savings-only limit; the resident senior gets the larger ₹50,000 limit that also covers fixed and recurring deposits.

• An individual below 60 deducts up to ₹10,000 of their own savings-account interest. Age is tested during the tax year, so from the year you turn 60 you move onto the ₹50,000 senior limit.
• A resident senior citizen (60 or older at any time in the year) deducts up to ₹50,000 of interest from any deposit. Senior citizens aged 60 to 79 and super seniors of 80 and above share the same ₹50,000 limit; there is no higher figure for the very old.
• A Hindu Undivided Family gets its own ₹10,000 on the savings interest of accounts held in the HUF's name, separate from any claim its members make on their personal accounts.
• Non-residents can claim the ₹10,000 too, on NRO savings-account interest. NRE and FCNR interest is already exempt from Indian tax, so there is nothing left to deduct there. A non-resident is not a senior citizen for this section, so the ₹50,000 limb is closed to a non-resident even at 60-plus.
• No claim passes through a firm, an LLP, a company, or an association or body of individuals. Where a savings account is held by or for such an entity, the deduction is blocked, so a partner cannot claim it on the firm's account interest.

Companies, firms and LLPs never had this deduction; it is an individual-and-HUF relief. The NRO and NRE treatment carries over from the old Section 80TTA and is cross-checked against published copies of the enacted Act.†

Which interest qualifies, and which does not?

Interest on deposits with a bank, a co-operative bank engaged in banking, or a post office. How far it reaches depends on your limb. For an under-60 saver or an HUF, only savings-account interest counts: a fixed or recurring deposit is a "time deposit", and its interest is fully taxable with no ₹10,000 shelter. For a resident senior, the ₹50,000 limb reaches every kind of deposit, savings, fixed, recurring, and post office schemes such as the Senior Citizens' Savings Scheme and the Monthly Income Scheme.

The co-operative line is a real trap: interest from a co-operative society carrying on banking qualifies, but interest from an ordinary credit or housing co-operative society does not. Post office savings-account interest also carries a separate small exemption of ₹3,500 for a single holder and ₹7,000 for a joint account that sits on top of this deduction; those two figures carry over from the old law and are cross-checked against published copies of the enacted Act.†

How much can you deduct: ₹10,000 versus ₹50,000

The whole of your qualifying interest, up to your cap. Total the qualifying interest across every account and every bank: if it is at or below your cap, you deduct all of it and your taxable deposit interest is nil; if it is above, you deduct the cap and the rest is taxed at your slab. The cap is a single yearly ceiling per person, not per account and not per bank.

The deduction comes off your gross total income, so what it saves depends on your slab. The table shows what each limb is worth at each slab, with the 4% cess included.

Figures include the 4% health and education cess. Under the new regime the deduction is not allowed, so both limbs are worth nothing there whatever your income.

The ₹50,000 senior deduction is not the ₹1,00,000 TDS threshold

These are two different figures, and mixing them up is the most common senior-citizen mistake. The ₹50,000 is a deduction: it lowers the interest income you are taxed on. The ₹1,00,000 is a TDS threshold: from 1 April 2025 a bank need not deduct tax at source on a senior's interest until it crosses ₹1,00,000 in the year, up from the earlier ₹50,000 trigger. One decides your tax; the other decides only when the bank starts withholding.

The threshold has a sting people miss. Once a senior's interest from one bank tops ₹1,00,000, the bank deducts 10% TDS on the entire interest, not just the slice above ₹1,00,000. So ₹1,20,000 of FD interest draws ₹12,000 of TDS, not ₹2,000. That TDS is not your final tax: when you file you still claim the ₹50,000 deduction, work out tax on the balance, and any excess withheld comes back as a refund.

The ₹1,00,000 senior TDS threshold is the change made to the interest-TDS rules with effect from 1 April 2025; it is cross-checked against published copies of the enacted law. The 2025 Act houses the interest-TDS rules in the Section 393 payment-code table.†

Savings interest carries no TDS, so it all lands in your AIS

Banks do not deduct TDS on savings-account interest. The interest-TDS rules reach fixed and recurring deposits but leave savings interest alone. That does not make savings interest tax-free: it is fully taxable, and precisely because nothing is withheld, the full amount is reported to the department and appears in your Annual Information Statement (AIS) to be matched against your return.

The trap is assuming small savings interest can be ignored. It cannot. The AIS carries it, and a return that omits it invites a mismatch notice, even for a few hundred rupees. Declare the full interest, then claim the ₹10,000 or ₹50,000 deduction against it. The deduction is what makes the interest tax-free up to your cap, not any exemption at source.

Fixed and recurring deposit interest does attract TDS once it crosses the annual threshold, a separate mechanic from this deduction.†

How to claim it: ITR entry, Form 15H and joint accounts

You claim the deduction in your return, not at your bank. Report the full interest under "Income from other sources", then claim the deduction in the Chapter VIII deductions schedule of the ITR (the old Schedule VI-A), against the 80TTA or 80TTB field until the return forms re-label to Section 153. Your AIS pre-fills most of the interest, and nothing is attached to the return, but keep your bank interest certificates to back the figure.

Two mechanics are worth getting right:

• Form 15H stops TDS before it starts. A resident senior whose estimated tax for the year is nil can file Form 15H with each bank at the start of the financial year, so the bank does not withhold in the first place. File it in April, not December, or you wait for a refund on the interest already paid.
• On a joint deposit, the interest and the deduction belong to the first holder, whose PAN the bank reports the interest against. Salaried and pensioner filers can also declare the interest to their employer so it reflects in TDS, though many simply claim it at filing.

Reconcile your interest against Form 26AS and the AIS before filing; a gap between what the banks report and what you declare is a common trigger for a notice.

Is Section 153 available under the new regime?

No. Like the rest of the Chapter VIII deduction basket, Section 153 works only if you opt out of the default new regime into the old regime. On the new regime, deposit interest is taxed with no ₹10,000 or ₹50,000 shelter.

That rarely stings at lower incomes, because the new regime's Section 156 rebate zeroes tax up to ₹12 lakh of income anyway, and a senior on the new regime also gets the higher ₹4 lakh basic exemption. Where the deduction matters is for an old-regime filer already itemising the bigger breaks (home-loan interest, the Section 123 investment basket, health premiums): the ₹10,000 or ₹50,000 is an automatic top-up they should not leave on the table.

Should you rely on the deduction, and how do you use each limit fully?

Treat each cap as a shelter to fill, not overshoot. For an under-60 saver, ₹10,000 of interest at a 3% to 4% savings rate corresponds to roughly ₹2.5 lakh to ₹3.3 lakh of average balance; park much more than that in a plain savings account and the interest above ₹10,000 is taxed in full. For a senior, ₹50,000 of interest at a 7% fixed-deposit rate corresponds to roughly ₹7 lakh of deposits.

Three moves make each limit work harder:

• Fill the cap per person, not per account. It is one yearly ceiling across all your accounts, so spreading ₹5 lakh across three banks still caps an under-60 saver at ₹10,000. Different people each get their own: a couple both under 60 have ₹10,000 each (₹20,000 together), an HUF adds a separate ₹10,000, and two 60-plus spouses have ₹50,000 each (₹1,00,000 together). Route family savings across separate holders rather than piling them into one name.
• Move a retired parent's deposits into their own name. A 60-plus parent's ₹50,000 limb shelters five times the under-60 limit and reaches FD interest, so a retiree's fixed deposits belong in the parent's account, not a child's. On ₹50,000 of FD interest at a 20% slab, that placement alone saves ₹10,400 of tax.
• For a senior, keep no single bank paying more than ₹1,00,000 of interest if you want to skip TDS paperwork, and file Form 15H in April when your tax will be nil. Neither move changes the tax you finally owe; both save you from waiting on a refund.

The section is small by design and no substitute for the bigger levers (the ₹1.5 lakh Section 123 basket, home-loan interest, health premiums). But it is automatic and costs nothing to claim, so on the old regime it is money left behind if you skip it.

Worked examples

Section 153 FAQs

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