What are the Section 80TTA and 80TTB of Income Tax Act?

What are the Section 80TTA and 80TTB of Income Tax Act?

Sections 80TTA and 80TTB offer tax relief on interest income earned from bank accounts. Section 80TTA allows individuals and HUFs (except senior citizens) to claim a deduction of up to ₹10,000 on interest earned from savings accounts. Section 80TTB, explicitly designed for senior citizens, extends this benefit up to ₹50,000 and includes both savings and fixed deposit interest. These provisions help taxpayers reduce their taxable income through everyday banking.

What is Section 80TTA?

 

Section 80TTA of the Income Tax Act offers a deduction on interest income earned from savings accounts. This benefit is available to individual taxpayers and Hindu Undivided Families (HUFs) but not to senior citizens, who are covered separately under Section 80TTB. Under 80TTA, you can claim a deduction of up to ₹10,000 in a financial year on interest earned from savings accounts held in banks, post offices, or cooperative banks.

It's important to note that this section does not cover interest from fixed deposits or recurring deposits. The deduction is applied while calculating your total taxable income. It can help reduce your overall tax liability, especially if you maintain substantial balances in your savings accounts throughout the year.

Eligibility Criteria for 80TTA Deduction

To claim a deduction under Section 80TTA, the taxpayer must be an individual or part of a Hindu Undivided Family (HUF). This benefit is not available to senior citizens, as they fall under Section 80TTB. The deduction applies only to interest earned from savings accounts held with a bank, post office, or cooperative society.

Interest from fixed deposits, recurring deposits, or other investment instruments is not eligible. The maximum deduction allowed under this section is ₹10,000 in a financial year, and the interest must be reported under the head "Income from Other Sources."

Interest Income Sources Eligible Under 80TTA

Section 80TTA allows deductions only on specific types of interest income. The eligible sources include:

• Interest earned from savings accounts held with a scheduled bank.
• Interest from savings accounts maintained in a cooperative bank.
• Interest from savings accounts (2) with a post office.

It's essential to note that only interest from savings accounts qualifies. Interest from fixed deposits, recurring deposits, corporate bonds, or any other investment instruments is not eligible under this section. The total deduction allowed is capped at ₹10,000 per financial year across all qualifying savings accounts combined.

Interest Income Sources Not Eligible Under 80TTA

Section 80TTA does not cover all types of interest income. The following sources are not eligible for deduction:

• Interest from fixed deposits (FDs)
• Interest from recurring deposits (RDs)
• Interest earned on corporate bonds or debentures
• Interest from company fixed deposits or NBFCs
• Interest from term deposits, even if held in banks or post offices
• Income from sweep-in accounts linked to FDs
• Interest earned on any deposit that is not a regular savings account

Only interest from standard savings accounts qualifies. All other forms of deposit interest are excluded from this deduction.

What is Section 80TTB?

 

Section 80TTB of the Income Tax Act provides tax relief exclusively to senior citizens by allowing a deduction of up to ₹50,000 on interest income. This includes interest earned not just from savings accounts but also from fixed deposits and recurring deposits held with banks, post offices, or cooperative societies. The provision was introduced to offer greater financial ease to individuals aged 60 years or above. The deduction can be claimed while filing income tax returns and helps lower the overall taxable income.

It's important to note that if a senior citizen claims a deduction under Section 80TTB, they cannot claim Section 80TTA for the same financial year.

Eligibility Criteria for 80TTB Deduction

• The taxpayer must be a resident senior citizen, i.e., aged 60 years or above.
• Only individuals—not Hindu Undivided Families (HUFs) or other entities—are eligible.
• Applicable to interest earned from savings accounts, fixed deposits, and recurring deposits.
• Interest must be from accounts held with a bank, post office, or cooperative bank.
• The maximum deduction allowed under this section is ₹50,000 per financial year.
• The deduction is not available if Section 80TTA is already claimed in the same year.
• The benefit applies to interest income reported under "Income from Other Sources."

Interest Income Sources Eligible Under 80TTB

• Interest from savings accounts held in banks, post offices, or cooperative banks
• Interest from fixed deposits (FDs) in scheduled banks or post offices
• Interest from recurring deposits (RDs) in banks or cooperative banks
• Interest from time deposits maintained by a senior citizen
• Applicable only if the account is held in the name of the senior citizen
• Total deduction allowed: up to ₹50,000 per financial year
• Interest must be reported under the head "Income from Other Sources"
• This applies only to resident individuals aged 60 years or above

Interest Income Sources Not Eligible Under 80TTB

• Interest earned from corporate bonds or debentures
• Interest from non-banking financial companies (NBFCs)
• Interest income from company fixed deposits
• Any capital gains or dividends earned from investments
• Interest from savings certificates like NSC, unless specified
• Interest on loans given to relatives or others
• Any income not classified under "Income from Other Sources"
• Accounts held by non-senior citizens or in joint names where the primary holder is not eligible

Comparison: 80TTA vs 80TTB – Key Differences

 

While both Section 80TTA and 80TTB offer tax deductions on interest income, they cater to different age groups and types of deposits. Understanding the distinctions can help you claim the right deduction and avoid overlap.

Feature	Section 80TTA	Section 80TTB
Applicable To	Individuals & HUFs (below 60 years)	Senior Citizens (60 years & above)
Maximum Deduction Allowed	₹10,000	₹50,000
Types of Accounts Covered	Savings accounts only	Savings, Fixed Deposits, Recurring Deposits
Financial Institutions Covered	Banks, Post Offices, Cooperative Banks	Banks, Post Offices, Cooperative Banks
Applicable for Senior Citizens	No	No
Can Claim Both Together?	No, only one section can be claimed	No, only one section can be claimed

Choosing between 80TTA and 80TTB depends entirely on the taxpayer's age and the nature of the interest income. Senior citizens should opt for 80TTB for broader coverage and higher deduction benefits.

How to Claim Deductions Under 80TTA and 80TTB

 

To claim deductions under Section 80TTA or 80TTB, start by reporting your interest income under "Income from Other Sources" in your income tax return. If you're below 60 years old, you can claim up to ₹10,000 under Section 80TTA for interest from savings accounts. If you're a senior citizen, you're eligible for a higher deduction of up to ₹50,000 under Section 80TTB, which includes both savings and deposit interest. Ensure you don't claim both in the same year.

Keep relevant documents, such as bank statements or interest certificates, ready to support your claim and avoid discrepancies.

Common Mistakes to Avoid While Claiming 80TTA/80TTB Deductions

 

• Claiming both 80TTA and 80TTB in one financial year
• Declaring fixed deposit interest under 80TTA instead of 80TTB
• Forgetting to report interest income before claiming the deduction
• Exceeding the permitted deduction limit
• Senior citizens wrongly opting for 80TTA
• Including ineligible interest sources like corporate FDs
• Not maintaining proof of interest income
• Claiming for joint accounts where the taxpayer isn't the primary holder
• Overlooking TDS deducted by banks
• Missing the correct section in the ITR form while filing

Maximizing Tax Benefits Through 80TTA and 80TTB

 

Sections 80TTA and 80TTB provide valuable deductions on interest income, allowing you to reduce your taxable income easily. By understanding who qualifies for which section, what income sources are covered, and how to file correctly, you can make the most of these provisions.

Whether you're an individual or a senior citizen, smart tax planning using these deductions ensures better savings and compliance.

FAQs on Section 80TTA and 80TTB Deductions

 

Q1. What is the maximum deduction allowed under Section 80TTA?

The maximum deduction allowed under Section 80TTA is ₹10,000 per financial year. This applies only to interest earned from savings accounts held with banks, post offices, or cooperative societies and is available to individuals and Hindu Undivided Families (HUFs), excluding senior citizens.

Q2. Can senior citizens claim deductions under Section 80TTA?

No, senior citizens cannot claim deductions under Section 80TTA. Instead, they are eligible for a higher deduction of up to ₹50,000 under Section 80TTB, which covers both savings and deposit interest income from specified financial institutions.

Q3. What types of interest income are not covered under 80TTA and 80TTB?

Interest from corporate bonds, company FDs, NBFCs, and capital gains are not eligible. Under 80TTA, fixed and recurring deposit interest is also excluded. Under 80TTB, only interest from specified banks, post offices, or cooperative banks is eligible for coverage.

Q4. How do I claim the 80TTA deduction in my income tax return?

Report the interest income under "Income from Other Sources" in your ITR and then claim the deduction under Section 80TTA in the deductions section. Ensure the interest qualifies and does not exceed ₹10,000 in the financial year.

Q5. Is it possible to claim both 80TTA and 80TTB deductions in the same financial year?

No, you cannot claim both. If you are eligible for Section 80TTB (senior citizen), you must claim only under that section. Section 80TTA is meant for non-senior individuals and cannot be combined with 80TTB in the same year.

AN Jul 45/25