Section 80TTB

Section 80TTB is the provision of the repealed Income-tax Act 1961 that let a resident individual aged 60 or more deduct up to Rs. 50,000 a year of interest on deposits with a bank, a co-operative bank or a post office. From 1 April 2026 the same deduction is Section 153(1)(b) read with Section 153(2)(b) of the Income-tax Act 2025, at the same Rs. 50,000 ceiling and only in the old tax regime.

Section 536(1) of the 2025 Act repealed the 1961 Act from 1 April 2026, but Section 536(2)(c) keeps the repealed Act alive for tax years beginning before that date. A pensioner filing in 2026 for the financial year 2025-26 therefore claims Section 80TTB, and the first Section 153 claim is in the return for 2026-27, filed in 2027. The name “80TTB” survives in bank statements, in the return utilities for earlier years and in common speech, which is why this page keeps the old number as its title.

The deduction covers interest on savings accounts, fixed deposits, recurring deposits, post office time deposits and the Senior Citizens’ Savings Scheme, all inside one Rs. 50,000 limit. It does not cover company deposits, bonds or debentures. It is a different figure from the Rs. 1,00,000 threshold below which a bank does not deduct tax from a senior citizen’s interest, and the two are confused more often than any other pair of numbers in senior citizen tax.

For a retired central government pensioner the deduction is worth Rs. 15,600 a year at the 30% slab before surcharge, and up to Rs. 20,800 where it brings total income under the Rs. 5,00,000 rebate line. In the new tax regime, which every pensioner is in unless they opt out, the Section 156(2)(a) rebate cancels the tax on total income up to Rs. 12,00,000 without Section 153. The sections below set out the text, the interest that qualifies, the people who qualify, the arithmetic, and the narrow set of cases in which the deduction decides a pensioner’s tax.

Which provision applies to which tax year

The citation follows the year the interest belongs to, not the date the return is filed. Section 536(2)(c) of the Income-tax Act 2025 continues the repealed 1961 Act for assessment, reassessment, rectification, penalty, revision and appeal in respect of any tax year beginning before 1 April 2026.

Provision governing the senior-citizen interest deduction by financial year, under Section 536(2)(c) of the Income-tax Act 2025.

Section 80TTB was itself a creation of the Finance Act 2018 (No. 13 of 2018). Section 32 of that Act inserted it with effect from 1 April 2019, so it first applied to the assessment year 2019-20, the income of the financial year 2018-19, at the Rs. 50,000 figure that has never changed. Section 31 of the same Act inserted the words “other than the assessee referred to in section 80TTB” into Section 80TTA(1), and Section 49 raised the senior-citizen threshold for tax deducted at source on interest under Section 194A from Rs. 10,000 to Rs. 50,000. Section 58 of the Finance Act 2025 raised that threshold to Rs. 1,00,000, the figure Section 393(1) Table serial 5(ii) of the 2025 Act carries.

The text of Section 153

Section 153 of the Income-tax Act 2025, headed “Deduction for interest on deposits”, replaced two sections of the 1961 Act with one. Section 153(1) lists three kinds of assessee: (a) an individual, not being a senior citizen; (b) an individual, being a senior citizen; and (c) a Hindu undivided family. Each “shall be allowed a deduction from the gross total income” where it includes interest on deposits with one of three institutions.

Section 153(2) then sets the amount in two clauses:

Section 153(2), Income-tax Act 2025, tax year 2026-27, old regime only.

Section 153(3) and 153(4) bar the deduction where the deposit is held by or on behalf of a firm, an association of persons or a body of individuals, so that a partner or member cannot claim it on a share of the entity’s interest. Section 153(5) defines “time deposits” as “the deposits repayable on expiry of fixed periods”.

Read against Section 80TTB, the 2025 text changes nothing of substance. Section 80TTB(1) allowed the whole of the interest where it did not exceed fifty thousand rupees in aggregate and fifty thousand rupees in any other case; Section 153(2)(b) says “the whole of the interest up to a maximum amount of Rs. 50000”. Section 80TTB defined “senior citizen” in its own Explanation; Section 153 relies on the general definition in Section 2(100), which is the same test. The post office reference moved from clause (k) of Section 2 of the Indian Post Office Act 1898 to Section 2(d) of the Post Office Act 2023, the statute that replaced it.

Who can claim the Rs. 50,000 deduction

Only an individual who is a senior citizen. Section 2(100) of the Income-tax Act 2025 defines a senior citizen as “an individual resident in India who is of the age of sixty years or more at any time during the relevant tax year”. Three consequences follow.

Age is reached at any point in the year. A pensioner born on 20 February 1967 turns 60 on 20 February 2027 and is a senior citizen for the whole of the tax year 2026-27, which runs from 1 April 2026 to 31 March 2027. All the qualifying interest of that year, including interest credited in April 2026 while the person was 59, counts towards the Rs. 50,000.

Residence is a condition. A non-resident aged 70 is not a senior citizen under Section 2(100). That person falls under Section 153(1)(a) as an individual “not being a senior citizen”, a limb with no residence condition of its own, and can deduct up to Rs. 10,000 of savings-account interest, such as interest on an NRO savings account, in the old regime. Residence for an individual is tested on days of stay in India under Section 6 of the 2025 Act, so a retired officer who spends a long year abroad with family can lose the Rs. 50,000 limit for that year and regain it the next.

The status is personal. A Hindu undivided family is placed in Section 153(1)(c) with non-senior individuals and limited to Rs. 10,000 on savings interest whatever the karta’s age. A husband aged 64 and a wife aged 61 each have their own Rs. 50,000 limit against interest that is income of each. Whose income a deposit’s interest is depends on whose money funded it: where one spouse transfers money to the other without adequate consideration, Section 99(1)(a)(ii) of the 2025 Act includes the income from the transferred asset in the transferor’s total income. Section 153 then operates on the gross total income that includes the interest, whichever spouse that is.

Interest that qualifies

Section 153(1) names three classes of institution, and only interest on deposits with them qualifies:

1. a banking company to which the Banking Regulation Act 1949 applies, including any bank or banking institution referred to in Section 51 of that Act;
2. a co-operative society engaged in carrying on the business of banking, including a co-operative land mortgage bank or a co-operative land development bank;
3. a Post Office as defined in Section 2(d) of the Post Office Act 2023.

Within those institutions, Section 153(2)(b) admits deposits “in any account, including time deposits”. The practical list for a pensioner is:

Qualifying and non-qualifying interest under Section 153(1) and (2)(b), Income-tax Act 2025. Compiled by salary-calculator.in from the text of the section.

A single deposit can earn two deductions in two places. The principal of a term deposit for a fixed period of not less than five years with a scheduled bank qualifies under Section 123 read with Schedule XV paragraph 1(s), and a five-year Post Office Time Deposit under paragraph 1(v), within the Rs. 1,50,000 aggregate ceiling, and the interest it earns qualifies under Section 153(2)(b). A Senior Citizens’ Savings Scheme deposit does the same under Schedule XV paragraph 1(u). All are old-regime deductions.

How the deduction is computed

The deduction is the lower of the qualifying interest and Rs. 50,000, computed on the gross interest credited for the year. Tax deducted at source is a credit against the final tax, not a reduction of the income, so a fixed deposit that earns Rs. 60,000 and suffers Rs. 6,000 of tax at source produces Rs. 60,000 of income and a Rs. 50,000 deduction.

Two general rules in Chapter VIII bound it. Section 122(1) allows Chapter VIII deductions from gross total income, and Section 122(2) provides that “the aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee”. The deduction under Section 153 cannot create a loss or reduce tax on income that is outside gross total income.

Interest is taxed under the head “Income from other sources”, which Section 92 of the Income-tax Act 2025 charges, so the deduction comes after pension has been reduced by the standard deduction and the interest has been added to it. The sequence for a senior citizen in the old regime is:

1. pension, less the Rs. 50,000 old-regime standard deduction under Section 19(1) Table serial 2;
2. add interest and other income to reach gross total income;
3. deduct Chapter VIII items, including Section 153(2)(b), Section 126 and Section 123, to reach total income;
4. apply the Paragraph A(II) or A(III) slab table of Part I-B of the First Schedule to the Finance Act 2026, then the Section 156(1) rebate if total income is Rs. 5,00,000 or less, then the 4% health and education cess.

Old regime only

Section 202(2)(a)(xii) of the Income-tax Act 2025 strikes out every Chapter VIII deduction from the new-regime computation except Sections 124(1), 124(2), 125(2) and 146. Section 153 is not among the survivors, so in the default new regime under Section 202 a senior citizen pays tax on every rupee of deposit interest.

That loss rarely costs a pensioner money. The Table to Section 202(1) charges nil up to Rs. 4,00,000, and Section 156(2)(a) allows a rebate of up to Rs. 60,000 where total income does not exceed Rs. 12,00,000. A senior citizen with pension and interest of Rs. 12,75,000 in total, before the Rs. 75,000 standard deduction, pays no tax in the new regime with or without Section 153. The old regime, for the same person, allows Rs. 50,000 under Section 153 but charges slab tax from Rs. 3,00,000 and offers its rebate only up to Rs. 5,00,000.

A senior citizen without business or professional income chooses the regime each year in the return under Section 202(4)(b), so the deduction can be claimed in a year when other old-regime items, such as home-loan interest or a large Section 128 claim, tip the balance, and left aside the next year. The old vs new tax regime article and the tax regime break-even calculator guide give the full comparison.

What the deduction is worth

The tax saved is the Rs. 50,000 multiplied by the marginal slab rate, plus cess on that saving. salary-calculator.in computes it from the Paragraph A(II) table of the Finance Act 2026 as follows:

Tax value of the Section 153(2)(b) deduction to a resident aged 60 to 79, tax year 2026-27, including 4% cess. Derived by salary-calculator.in; the deduction is assumed to stay inside one slab.

For a super-senior citizen aged 80 or more the Paragraph A(III) table has no 5% band: the deduction saves nothing where total income before it is Rs. 5,00,000 or less, and Rs. 10,400 where total income after it stays between Rs. 5,00,000 and Rs. 10,00,000. The super-senior citizen taxation article sets out that table.

The rebate line at Rs. 5,00,000

The deduction is worth more than its slab value where it pulls total income to Rs. 5,00,000 or below. Section 156(1) allows a resident individual in the old regime a rebate of 100% of the tax or Rs. 12,500, whichever is less, where total income does not exceed Rs. 5,00,000, and it has no marginal relief above that line.

Take a retired Multi-Tasking Staff member aged 63 with a pension and dearness relief of Rs. 3,00,000 and interest of Rs. 2,80,000 (Rs. 2,60,000 on fixed deposits and Rs. 20,000 on savings), with no other deductions:

Tax year 2026-27, Income-tax Act 2025 and Paragraph A(II), Part I-B, First Schedule, Finance Act 2026. Computed by salary-calculator.in.

Here Rs. 50,000 of deduction saves Rs. 16,640, a third of its face value, because it moves the pensioner under the rebate line. The same pensioner in the new regime has total income of Rs. 5,05,000 after the Rs. 75,000 standard deduction, slab tax of Rs. 5,250, and a rebate that cancels it, so both regimes give nil. In the old regime the claim is what makes it nil.

A pensioner on an ordinary pension

A retired Under Secretary aged 70 draws pension and dearness relief of Rs. 9,00,000 and earns Rs. 1,40,000 of interest (Rs. 1,28,000 on fixed deposits and Rs. 12,000 on savings). In the old regime the pensioner claims Rs. 1,50,000 under Section 123, Rs. 50,000 under Section 126 for health insurance and Rs. 50,000 under Section 153.

Gross total income is Rs. 8,50,000 of pension after the Rs. 50,000 standard deduction plus Rs. 1,40,000 of interest, or Rs. 9,90,000. Deductions of Rs. 2,50,000 leave a total income of Rs. 7,40,000. Slab tax is Rs. 10,000 on the 5% band plus 20% of Rs. 2,40,000, which is Rs. 48,000, for Rs. 58,000, and cess takes it to Rs. 60,320. Without Section 153 the tax would be Rs. 70,720, so the deduction is worth Rs. 10,400.

The new regime puts the same pensioner at a total income of Rs. 9,65,000, which is Rs. 9,00,000 less Rs. 75,000 plus Rs. 1,40,000. Slab tax is Rs. 20,000 on the 5% band and Rs. 16,500 on the 10% band, Rs. 36,500 in all, and the Section 156(2)(a) rebate cancels the whole of it. The old regime costs this pensioner Rs. 60,320 a year more, deduction included.

The deduction and tax deducted at source

Section 153 decides how much interest is taxable; Section 393 decides how much tax the bank withholds while the year is running. The two run on different figures.

Section 393(1) Table serial 5(ii) of the Income-tax Act 2025 requires a banking company, a co-operative society carrying on banking or a post office to deduct tax from interest other than interest on securities only above Rs. 1,00,000 a year for a senior citizen, against Rs. 50,000 for anyone else. That threshold applies in both regimes and says nothing about liability. A senior citizen with Rs. 90,000 of interest suffers no deduction at source, can claim only Rs. 50,000 under Section 153 in the old regime and nothing in the new, and pays any tax due on the rest with the return as self-assessment tax.

Where the estimated tax on total income for the year is nil, the senior citizen can stop deduction altogether by giving the bank a declaration under Section 393(6) in Form No. 121, prescribed by rule 211 of the Income-tax Rules 2026 in place of Forms 15G and 15H. The Note under the Table in Section 393(6) lets a resident aged 60 or more give the declaration even where the interest exceeds the basic exemption, so long as the estimated tax is nil. The senior citizen tax article works through that test.

Interest credited by every bank and post office is reported to the Income Tax Department and appears in the annual information statement in Form No. 168 under rule 245 of the Income-tax Rules 2026, the successor to Form 26AS. The figure there is the gross interest, and the Section 153 deduction is claimed against it in the return.

Claiming the deduction

In the return. A senior citizen claims Section 153(2)(b) in the return of income for the tax year, after opting for the old regime under Section 202(4)(b). A pensioner with pension, interest and no more than two house properties files ITR-1, and one aged 80 or more may file it on paper under rule 164(12) Table serial 4 of the Income-tax Rules 2026.

Through the pension-paying bank. Section 392(4)(a)(iv) of the Income-tax Act 2025 lets an assessee give the person deducting tax on salary particulars of income under any other head, and rule 204(1)(c) of the Income-tax Rules 2026 prescribes Form No. 122 for that purpose. A pensioner who reports deposit interest to the pension-paying bank in Form No. 122 can have the tax on the interest and the deduction reflected in the monthly tax deducted from the pension, avoiding a large balance at the year end. The bank’s certificate in Form No. 130, the successor to Form 16, then shows the combined figure.

For a specified senior citizen aged 75 or more. Where a pensioner meets the conditions of Section 402(39) and has given the bank Form No. 125 under rule 208, the bank computes total income after Chapter VIII deductions, including Section 153(2)(b), and deducts tax on it under Section 393(1) Table serial 8(iii). No return is then required under Section 263(8)(b). The Section 194P article covers that route.

Section 80TTB and Section 80TTA

Section 80TTA of the 1961 Act gave any individual or Hindu undivided family a deduction of up to Rs. 10,000 on savings-account interest, excluding time deposits. Section 80TTB gave a resident senior citizen up to Rs. 50,000 on any deposit interest. The opening words of Section 80TTA(1) confined it to an assessee “other than the assessee referred to in section 80TTB”, so a resident senior citizen could use only Section 80TTB.

The 2025 Act keeps both deductions in Section 153 and keeps them mutually exclusive by drafting. Section 153(1)(a) describes “an individual, not being a senior citizen” and Section 153(1)(b) “an individual, being a senior citizen”, so no individual falls into both. The Section 80TTA limit therefore never stacks on the Rs. 50,000: the most a senior citizen deducts under Section 153 is Rs. 50,000, and the most anyone else deducts is Rs. 10,000.

The two limbs of Section 153, Income-tax Act 2025, tax year 2026-27.

Common misreadings

“Senior citizens get Rs. 1,00,000 of tax-free interest.” The deduction is Rs. 50,000 under Section 153(2)(b), old regime only. Rs. 1,00,000 is the deduction-at-source threshold in Section 393(1) Table serial 5(ii), and interest below it can still be taxable.

“The Rs. 50,000 is per bank.” It is per person per tax year, across every bank, co-operative bank and post office account together.

“Corporate fixed deposits count.” Section 153(1) names banking companies, co-operative societies carrying on banking and the Post Office. A deposit with a company or a non-banking financial company is outside it.

“The deduction applies in the new regime because it is a senior-citizen benefit.” Section 202(2)(a)(xii) removes it. The new regime has no age-based benefit except those, such as the deduction-at-source threshold, that sit outside the tax computation.

“Section 80TTB still applies in 2026-27.” For income of the year beginning 1 April 2026 the provision is Section 153 of the Income-tax Act 2025. Section 80TTB applies to 2025-26 and earlier years.

“A senior citizen can add Section 80TTA’s Rs. 10,000.” Section 153(1)(a) and (b) are alternatives, as the opening words of Section 80TTA(1) made them under the 1961 Act.

Related Articles

• Senior citizen tax
• Super-senior citizen taxation
• Senior Citizens’ Savings Scheme tax
• Section 194P
• Section 80DDB
• Section 80TTA
• Section 80D
• Section 80C
• Income tax for pensioners
• Income-tax Act 2025
• Old tax regime
• New tax regime
• Section 202 new regime
• Old vs new tax regime
• Tax regime break-even calculator guide
• How to switch tax regime
• Deductions allowed in the new tax regime
• Rebate, deduction and exemption
• Section 87A rebate
• Standard deduction
• Health and education cess
• Surcharge on income tax
• TDS on salary
• Form 16
• Form 26AS
• ITR-1 Sahaj
• Self-assessment tax
• Advance tax
• Home loan interest, Section 24(b)
• Dearness relief
• Central government pension
• Income tax for government employees

External references

• Income Tax Department, Income-tax Act 2025 and Rules
• Income-tax e-filing portal
• The Gazette of India, Finance Act 2026 and Income-tax Rules 2026
• National Savings Institute, small savings schemes
• India Post, savings schemes
• Pensioners’ Portal

References

1. Income-tax Act 2025 (No. 30 of 2025), Section 153 (deduction for interest on deposits) and Section 2(100) (senior citizen), in force 1 April 2026.
2. Income-tax Act 2025, Section 536(1) and 536(2)(c) (repeal of the Income-tax Act 1961 and saving).
3. Income-tax Act 1961, Sections 80TTA and 80TTB, as they stood on 31 March 2026.
4. Income-tax Act 2025, Section 122 (general provisions of Chapter VIII), Section 202(2)(a)(xii) and 202(4)(b) (new regime), Section 156 (rebate).
5. Income-tax Act 2025, Section 393(1) Table serials 5(ii) and 8(iii), Section 393(6) with the Note to its Table, Section 392(4)(a)(iv) and Section 402(39).
6. Income-tax Rules 2026, rule 204 and Form No. 122, rule 208 and Form No. 125, rule 211 and Form No. 121, rule 245 and Form No. 168.
7. Finance Act 2026 (No. 4 of 2026), Section 3 and Paragraph A(II) and A(III) of Part I-B of the First Schedule, assented 30 March 2026.