Chapter VIII - Deductions to be Made in Computing Total Income
Section 153
Section 153: deduction for interest on bank, co-operative and post office deposits
Section 153 is the Income-tax Act, 2025's version of two deductions taxpayers previously knew separately as "80TTA" (savings account interest) and "80TTB" (senior citizen deposit interest) - the new Act combines both into one section, with the applicable limit depending on whether the assessee is a senior citizen.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) An assessee who is— (a) an individual, not being a senior citizen; or (b) an individual, being a senior citizen; or (c) a Hindu undivided family, shall be allowed a deduction from the gross total income, subject to conditions specified in sub-section (2), where it includes income by way of interest on deposits with— (i) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act); or (ii) 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); or (iii) a Post Office as defined in section 2(d) of the Post Office Act, 2023 (43 of 2023).
(2) The deduction under sub-section (1) shall be allowed for a tax year as follows:— (a) in case of an assessee mentioned in sub-section (1)(a) or (c), the whole of the interest up to a maximum amount of ₹ 10000 on deposits in a savings account, excluding time deposits; (b) in case of an assessee mentioned in sub-section (1)(b), the whole of the interest up to a maximum amount of ₹ 50000 on deposits in any account, including time deposits.
(3) Where the income referred to in sub-section (2)(a) is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of such association or any individual of such body of individuals.
(4) Where the income referred to in sub-section (2)(b) is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of such association or any individual of such body of individuals.
(5) For the purposes of this section, the expression “time deposits” means the deposits repayable on expiry of fixed periods.
Introduction
Section 153 separates deposit-interest relief by claimant type: non-senior individuals and HUFs have a ₹10,000 savings-interest cap, while senior citizens have a ₹50,000 cap that can include time deposits. The deposit must be with a qualifying bank, banking co-operative or post office.
Key takeaways
Savings interest
An individual who is not a senior citizen, or a Hindu undivided family, may deduct up to ₹10,000 of qualifying savings-account interest; time deposits are excluded for this group.
Senior-citizen deposits
A senior citizen may deduct up to ₹50,000 of qualifying deposit interest, including time deposits, from a covered bank, co-operative bank or post office.
The two limits
The deduction applies to interest earned on deposits with a bank, a co-operative society carrying on banking business, or a Post Office.
| Assessee | What qualifies | Limit |
|---|---|---|
| Individual (not a senior citizen) or HUF | Interest on savings accounts only (not time/fixed deposits) | ₹10,000 |
| Individual, being a senior citizen | Interest on any deposit account, including time/fixed deposits | ₹50,000 |
Key conditions
- For a non-senior-citizen individual or an HUF, only savings account interest counts - fixed/time deposit interest is excluded entirely from this deduction.
- For a senior citizen, the higher ₹50,000 limit covers interest from any account, including fixed and time deposits, not just savings accounts.
- Where a savings account or deposit is held on behalf of a firm, an association of persons, or a body of individuals, no partner or member can separately claim this deduction for that income in their own individual return.
Classify deposits before totals
Separate savings interest from time-deposit interest and identify the account holder. An interest amount from an account held on behalf of a firm, AOP or BOI cannot be allocated to a partner or member for this deduction.
Step-by-step flow for applying Section 153
- 1
Is the assessee an individual or a Hindu undivided family?
- No: No deduction under Section 153.
- Yes: Go to the next step.
- 2
Is the interest on deposits with a banking company, a co-operative society carrying on banking, or a Post Office?
- No: No deduction under Section 153.
- Yes: Go to the next step.
- 3
Is the account held by or on behalf of a firm, AOP or BOI?
- Yes: No partner or member can claim the deduction for that interest.
- No: Go to the next step.
- 4
Is the individual a senior citizen?
- Yes: Interest on any deposit account, including time deposits, qualifies up to ₹50,000.
- No (or HUF): Only savings account interest qualifies, up to ₹10,000; time-deposit interest is excluded.
Practical checklist
Do
- Reconcile bank, co-operative and post-office interest certificates to the return.
- Apply the appropriate claimant-specific limit and include time deposits only for an eligible senior citizen.
Avoid
- Do not claim time-deposit interest within the ₹10,000 non-senior or HUF bucket.
- Do not claim a partnership or AOP/BOI account's interest in a partner's or member's personal computation.
Illustrative example
Worked example: a non-senior individual and a senior citizen
Hypothetical facts (illustration only, not a real taxpayer): Ravi (aged 45) earns savings bank interest of ₹14,000 and fixed deposit interest of ₹30,000. His mother Kamala, a senior citizen, earns savings interest of ₹8,000 and fixed deposit interest of ₹55,000 from a bank and a Post Office. Ravi is also a partner in a firm whose savings account earned ₹6,000 interest.
Ravi: eligible interest
Only savings interest counts under Section 153(2)(a): ₹14,000. The fixed deposit interest of ₹30,000 is a time deposit and is excluded.
Ravi: limit
Deduction is the interest up to ₹10,000, so ₹10,000.
Ravi: firm's account
The ₹6,000 earned on the firm's savings account cannot be claimed by him under Section 153(3).
Kamala: eligible interest
Interest on any account counts: ₹8,000 + ₹55,000 = ₹63,000.
Kamala: limit
Deduction is the interest up to ₹50,000, so ₹50,000.
Outcome
- Ravi's Section 153 deduction: ₹10,000.
- Kamala's Section 153 deduction: ₹50,000; ₹13,000 of her interest remains taxable.
Glossary
- Time deposit
- A deposit repayable on expiry of a fixed period.
- Savings account
- A non-time-deposit account whose interest can be included in the ₹10,000 category.
Frequently asked questions
Is this the same as "80TTA" and "80TTB"?
Yes - Section 153 of the Income-tax Act, 2025 combines what used to be two separate sections (80TTA for regular taxpayers, 80TTB for senior citizens) into a single provision with two different limits depending on age.
Can I claim ₹10,000 on my fixed deposit interest?
Not unless you're a senior citizen. For a non-senior individual or HUF, only savings account interest qualifies - fixed/time deposit interest doesn't count toward this deduction at all.
What's the deduction limit for a senior citizen?
₹50,000 on interest from any deposit account - savings, fixed, or time deposits - with a bank, co-operative bank, or Post Office.
Need help applying this provision to your situation?
Check your Section 153 deposit interest deduction with our tax teamLast updated 9 October 2026