Section 153 of the Income-tax Act, 2025 — Deduction for Interest on Savings and Deposits (Old 80TTA/80TTB)

In plain language

What Section 153 is about

Section 153 of the Income-tax Act, 2025 lets individuals and Hindu Undivided Families (HUFs) claim a deduction from their total income for interest earned on bank, co-operative bank and post office deposits. It is the new home for two well-known provisions of the old Income-tax Act, 1961 — Section 80TTA (savings-account interest for people below 60) and Section 80TTB (all deposit interest for senior citizens). The Income-tax Act, 2025 merges these into a single, cleaner section that takes effect from 1 April 2026 (i.e., from Tax Year 2026-27 onwards).

Who can claim it

• Resident and non-resident individuals below 60 years and HUFs — deduction on savings account interest only, up to ₹10,000.
• Senior citizens (60 years and above) — a bigger benefit: deduction on all deposit interest (savings plus fixed and recurring deposits), up to ₹50,000.
• Not available to companies, firms, LLPs, AOPs or BOIs. If a deposit is held by or on behalf of a firm, AOP or BOI, its partners or members cannot claim this deduction on that interest.

The key limits and conditions

• The limit is per taxpayer per tax year, not per account or per bank. If you have three savings accounts, you still get only one ₹10,000 cap in total (or ₹50,000 if you are a senior citizen).
• For non-seniors, time deposits (FDs, RDs) are specifically excluded — only ordinary savings-account interest qualifies.
• For senior citizens, both savings interest and time deposit interest count towards the ₹50,000 ceiling.
• Eligible institutions are: banking companies under the Banking Regulation Act, 1949, co-operative societies carrying on banking business, and the Post Office (as defined under the Post Office Act, 2023).
• The deduction is a ceiling, not a flat amount — you deduct the actual interest earned, capped at the limit.

How it interacts with other rules

• Old vs new regime: Like most Chapter deductions, this benefit is generally available under the old tax regime. Taxpayers who opt for the concessional/default new regime forgo it, so run the numbers before choosing.
• TDS on interest: Banks deduct TDS once interest crosses the threshold. Even where TDS applies, you can still claim the Section 153 deduction while filing, and seniors can file Form 15H (non-seniors Form 15G) to avoid TDS if their total income is below the taxable limit.
• One or the other: A person cannot use both the non-senior and senior limb — a senior citizen simply gets the single, higher ₹50,000 benefit.

Practical implications

For ordinary savers, Section 153 quietly shelters a small slice of savings interest from tax. For retirees living on FD income, the ₹50,000 senior-citizen limb is genuinely valuable — it can wipe out tax on a meaningful chunk of deposit interest. Always report the gross interest in your return first and then claim the deduction; do not simply omit interest that had no TDS, because the department cross-checks bank data through the Annual Information Statement (AIS).