Section 80TTA: Tax Deduction on Savings Account Interest Explained

Most taxpayers focus on big-ticket deductions—like Section 80C or 80D—but forget the small ones that also add up. Section 80TTA is one such overlooked gem. It might not seem like a huge amount, but when you're trying to save every rupee during tax season, it counts.

So, what is Section 80TTA? Who can claim it? And how do you claim this deduction?

Let’s break it down in simple terms.

What Is Section 80TTA?

Section 80TTA of the Income Tax Act, 1961, provides a deduction of up to Rs 10,000 on the income earned from interest on savings made in a bank, co-operative society or post office.

Yes, you heard that right—interest you earn on your savings account deposits is eligible for tax deduction, up to a limit.

It’s important to note that this deduction is allowed only on savings account interest, and not on fixed deposits or recurring deposits.

Who Can Claim Section 80TTA?

This deduction is available to:

• Individual taxpayers (except senior citizens, who are covered under Section 80TTB)
• Hindu Undivided Families (HUFs)

Senior citizens above the age of 60 cannot claim this deduction under 80TTA, because they already enjoy a higher limit of ₹50,000 under Section 80TTB.

So if you are below 60, this section allows you to claim deductions on savings account deposits and reduce your taxable income.

How Much Deduction Can You Claim?

The section grants a deduction on savings account interest up to Rs 10,000 per annum. That means:

• If you earned ₹8,000 interest in a year, the full amount is deductible.
• If you earned ₹15,000 interest, only ₹10,000 is deductible, and the rest is taxable.

The key phrase is: Section 80TTA allows a deduction of up to Rs 10,000, not more.

What Types of Accounts Are Covered?

Not all bank accounts are eligible. The deduction under Section 80TTA provides a deduction on the interest earned on your savings account only if it is held in:

• A bank (private or public sector)
• A post office savings account
• A co-operative society carrying on the business of banking

So, your FD or RD interest? Not covered.

But your regular savings account interest in SBI, HDFC, or even India Post? Eligible.

80TTA in Old vs New Tax Regime

Now comes a very important point—Section 80TTA is not available under the new tax regime introduced in FY 2020-21 (AY 2021-22 onwards).

If you have opted for the new regime (which has lower tax rates but fewer deductions), you cannot claim this deduction.

So if you want to use Section 80TTA in the old tax regime, make sure you’ve opted for it while filing your return.

How to Claim 80TTA Deduction?

It’s simple, but requires a bit of attention:

1. Check your bank statements or annual summary for the interest earned from your savings account.
2. Include that amount under the head “Income from Other Sources” in your ITR.
3. Claim a deduction under Section 80TTA—allows a tax deduction of up to ₹10,000—in the "Deductions under Chapter VI-A" section.
4. Make sure not to claim more than ₹10,000 even if you have multiple savings accounts.

Always keep your interest certificates or passbook entries as supporting documents.

Example to Understand Section 80TTA

Let’s say Rohan has the following savings interest:

• ₹4,000 from HDFC Bank
• ₹3,000 from SBI
• ₹6,000 from India Post

Total interest: ₹13,000

He must show ₹13,000 as “Income from Other Sources,” and then claim Section 80TTA deduction of ₹10,000. The balance of ₹3,000 will be taxed as per his applicable slab.

Why Section 80TTA Is Important?

You might think ₹10,000 is a small number. But here’s how it helps:

• If you're in the 30% tax slab, it saves you ₹3,000 in taxes
• If you're in 20%, it saves ₹2,000
• For the 5% slab, that’s ₹500

All for just keeping your money in a savings account!

Final Words

Section 80TTA is a useful and legitimate way to reduce your tax liability through an income source as simple as savings interest. It’s easy to miss, but equally easy to claim.

To recap:

• Section 80TTA provides a deduction of up to Rs 10,000 on the income earned from interest on savings made in a bank, co-operative society or post office.
• It allows you to claim deductions on savings account deposits, but not on FDs or RDs.
• It grants a deduction on savings account interest up to Rs 10,000 per annum.
• Only available under the old tax regime.

Don’t forget to include it in your next ITR filing—every rupee saved is a rupee earned.

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