Section 80TTB of Income Tax Act - Deductions for Senior Citizens

Introduction

For most people, retirement means shifting from a monthly salary to relying on passive income. The most trusted source of this income in India is the humble Fixed Deposit (FD). Senior citizens prefer FDs and Post Office schemes because they offer safety and predictable returns. However, there is a painful reality that often hits new retirees. The interest you earn on your life savings is fully taxable.

Inflation already eats into the value of your money, and when you add income tax to the mix, the real return on your savings can shrink drastically. Recognizing this hardship, the government introduced Section 80TTB in the 2018 Budget. This was a dedicated tax break designed exclusively for senior citizens.

Unlike the meager deduction available to younger individuals, Section 80TTB is generous. It covers not just savings account interest but also interest from FDs and RDs. In this guide, we will explain how you can reduce your taxable income by up to ₹50,000 using this section and the crucial interaction it has with the New Tax Regime in 2025.

Table of Contents

1. What is Section 80TTB?
2. Eligibility: Who Can Claim 80TTB?
3. Maximum Deduction Limit
4. Types of Interest Income Covered
5. Section 80TTB vs Section 80TTA: The Difference
6. Section 80TTB in New Tax Regime (2025 Update)
7. Impact on TDS (Section 194A)
8. How to Calculate the Deduction
9. Exceptions and Exclusions
10. FAQs

What is Section 80TTB?

Section 80TTB is a provision in the Income Tax Act that allows a Senior Citizen to claim a deduction on the interest income earned from deposits.

Before this section was introduced, senior citizens had to pay tax on every rupee of FD interest earned (unless they had no other income). Now, this section acts as a shield. It effectively makes the first ₹50,000 of your interest income tax-free. It is claimed under "Chapter VI-A" deductions, similar to Section 80C or 80D, at the time of filing your return.

Get instant access to markets—Open Demat account

Eligibility: Who Can Claim 80TTB?

To claim this benefit, you must meet the following criteria:

1. Residency: You must be a Resident individual. Non-Resident Indians (NRIs) are not eligible, even if they are senior citizens.
2. Age: You must be a Senior Citizen. This means you must be at least 60 years old at any time during the relevant financial year.
3. Income Source: You must have income classified under the head "Income from Other Sources," specifically from interest on deposits.

Note: Super Senior Citizens (above 80 years) are also covered under this section with the same limit.

Maximum Deduction Limit

The maximum deduction allowed under Section 80TTB is ₹50,000 per financial year.

This is an aggregate limit. It applies to the total interest earned from all your bank accounts combined.

• Scenario A: You earned ₹40,000 interest. Deduction allowed: ₹40,000. (Taxable Interest: 0).
• Scenario B: You earned ₹75,000 interest. Deduction allowed: ₹50,000. (Taxable Interest: ₹25,000).

Types of Interest Income Covered

Not all interest income qualifies. Section 80TTB covers interest derived from Deposits with:

1. Banking Company: Any bank, including public, private, or foreign banks operating in India.
2. Co-operative Society: Any co-operative land mortgage bank or co-operative land development bank.
3. Post Office: Any deposit scheme with the Post Office.

What is Included?

• Interest on Savings Bank Accounts.
• Interest on Fixed Deposits (FDs).
• Interest on Recurring Deposits (RDs).
• Interest on Post Office Monthly Income Scheme (POMIS) or Senior Citizen Savings Scheme (SCSS).

Track your RD growth with our RD calculator.

What is Excluded?

• Interest from Corporate FDs (e.g., deposits with NBFCs or manufacturing companies).
• Interest on Bonds or Debentures.

Section 80TTB vs Section 80TTA: The Difference

This is a common point of confusion. Section 80TTA is the younger sibling of 80TTB.

Feature

Section 80TTA

Section 80TTB

Applicability

Individuals < 60 years & HUFs

Senior Citizens (60+) only

Max Deduction

₹10,000

₹50,000

Coverage

Savings Account Interest ONLY

Savings + Fixed Deposits + RDs

FD Interest

Fully Taxable

Exempt up to the limit

Critical Rule: If you are a Senior Citizen claiming Section 80TTB, you cannot claim Section 80TTA. You get the bigger benefit, not both.

Section 80TTB in New Tax Regime (2025 Update)

This is the most important deciding factor for tax planning in 2025.

Section 80TTB is NOT available under the New Tax Regime.

If you opt for the New Tax Regime (under Section 115BAC), you lose access to Chapter VI-A deductions, including Section 80C, 80D, and 80TTB.

• Implication: If you choose the New Regime, your entire interest income of ₹75,000 (from the earlier example) will be taxable.
• Strategy: Senior Citizens with significant FD interest often find the Old Tax Regime more beneficial because of the combined effect of Section 80TTB (₹50k relief) and Section 80D (₹50k medical insurance relief).

Impact on TDS (Section 194A)

The introduction of Section 80TTB also led to an amendment in the TDS rules under Section 194A.

Banks are liable to deduct TDS on interest payments.

• For General Citizens: TDS is deducted if interest exceeds ₹40,000.
• For Senior Citizens: To align with 80TTB, the TDS threshold for seniors was raised to ₹50,000.

This means if your interest income is ₹48,000, the bank will NOT deduct any TDS, and you will NOT pay any tax (due to 80TTB). It is a seamless exemption.

How to Calculate the Deduction

Calculating your benefit is simple:

Step 1: Consolidate all your interest income (Savings + FD + RD + Post Office) for the year. Let's say it is ₹1,20,000.

Step 2: Add this to your "Gross Total Income" under the head "Income from Other Sources."

Step 3: Under Deductions (Chapter VI-A), enter ₹50,000 in the Section 80TTB row.

Step 4: Your Net Taxable Interest Income becomes ₹1,20,000 - ₹50,000 = ₹70,000.

Exceptions and Exclusions

Who cannot claim this?

1. Non-Residents: If you are an NRI senior citizen, you pay tax on interest generated in India without this deduction.
2. Firm/AOP/BOI: The interest income earned by a Partnership Firm or Association of Persons is fully taxable. This section applies only to individuals.
3. Income from Company Deposits: As mentioned earlier, high-interest corporate FDs do not qualify.