Section 153 of the Income-tax Act, 2025 allows ₹10,000 on savings account interest for an individual who is not a senior citizen and for an HUF, and ₹50,000 on interest from any deposit account including time deposits for a senior citizen.
What section 153 does
Section 153 does something the 1961 Act did not: it puts both interest deductions in one place. Sections 80TTA and 80TTB become a single provision with two limbs, distinguished by whether the assessee is a senior citizen.
The distinction is not merely the amount. For a non-senior individual or an HUF, the deduction is ₹10,000 and covers interest on savings accounts only, expressly excluding time deposits. For a senior citizen it is ₹50,000 and covers interest on any account, including time deposits — that is, fixed and recurring deposits count.
Eligible payers are the same for both limbs: a banking company under the Banking Regulation Act, 1949, a co-operative society carrying on banking business including co-operative land mortgage and land development banks, and a Post Office as defined in the Post Office Act, 2023.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 80TTA(1) | ₹10,000 on savings account interest | 153(1) and 153(2)(a) |
| 80TTB(1) | ₹50,000 for senior citizens on any deposit | 153(1)(b) and 153(2)(b) |
| 80TTA(2) | No deduction to partners or members on firm/AOP deposits | 153(3) |
| 80TTB(2) | Same bar for senior citizen deduction | 153(4) |
| 80TTA, Explanation | Meaning of time deposits | 153(5) |
Section 153 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1) — who can claim and from whom
Three classes of assessee qualify: (a) an individual who is not a senior citizen, (b) an individual who is a senior citizen, and (c) a Hindu undivided family. The deposit must be with (i) a banking company to which the Banking Regulation Act, 1949 applies, including a bank referred to in section 51 of that Act; (ii) a co-operative society carrying on the business of banking, including a co-operative land mortgage bank or land development bank; or (iii) a Post Office as defined in section 2(k) of the Post Office Act, 2023.
Sub-section (2)(a) — ₹10,000 for non-seniors and HUFs, savings accounts only
For an individual who is not a senior citizen, and for an HUF, the deduction is the whole of the interest up to ₹10,000 on deposits in a savings account, excluding time deposits. Interest on a fixed deposit or recurring deposit gets nothing under this limb.
Sub-section (2)(b) — ₹50,000 for senior citizens, any account
For a senior citizen, the deduction is the whole of the interest up to ₹50,000 on deposits in any account, including time deposits. This is the materially wider limb: fixed deposit interest, which is the main income source for many retirees, is covered.
Sub-sections (3) and (4) — no pass-through to partners or members
Where the interest is derived from a deposit held by or on behalf of a firm, an association of persons or a body of individuals, no deduction is allowed under this section to any partner of the firm, member of the association, or individual of the body. Sub-section (3) applies this to the ₹10,000 limb and sub-section (4) to the ₹50,000 limb.
Sub-section (5) — what a time deposit is
Time deposits means deposits repayable on the expiry of fixed periods. This single definition is what separates the two limbs: excluded for the ₹10,000 deduction, included for the ₹50,000 one.
Worked example
Two taxpayers with identical bank income in tax year 2026-27, both taxed outside section 202(1).
| Interest income | Amount | Individual aged 45 | Senior citizen aged 68 |
|---|---|---|---|
| Savings bank account interest | ₹14,000 | Deduction limited to ₹10,000 | Counted towards the ₹50,000 limb |
| Fixed deposit interest | ₹3,10,000 | Nil — time deposits are excluded | Counted towards the ₹50,000 limb |
| Post Office savings interest | ₹6,000 | Already exhausted by the ₹10,000 cap | Counted towards the ₹50,000 limb |
| Total deduction under section 153 | ₹10,000 | ₹50,000 |
The ₹40,000 difference is entirely a function of age and of the time-deposit exclusion. Note also that if the fixed deposit were held in the name of a partnership firm in which the senior citizen is a partner, sub-section (4) would deny the deduction on their share altogether.
Compliance checklist and due dates
- Identify whether the assessee is a senior citizen — it changes both the amount and the scope.
- For the ₹10,000 limb, include only savings account interest; exclude every fixed and recurring deposit.
- For the ₹50,000 limb, include interest from any deposit account, including time deposits.
- Confirm the payer is a bank, a co-operative society carrying on banking business, or a Post Office as defined in the Post Office Act, 2023.
- Do not claim a deduction on interest from a deposit held by a firm, AOP or BOI in which you are a partner or member.
- Interest from a company deposit, a debenture or a peer-to-peer platform does not qualify under either limb.
- Check section 202 before claiming, as the new regime restricts most Chapter VIII deductions.
Common mistakes
- Claiming ₹10,000 against fixed deposit interest. Sub-section (2)(a) excludes time deposits.
- Assuming a senior citizen also gets a separate ₹10,000 for savings interest. Section 153 gives one deduction, under the limb that applies.
- Claiming on interest from a firm's or AOP's deposit through the partner's or member's return.
- Treating interest from a non-banking company deposit as eligible.
- Overlooking Post Office savings interest, which does qualify.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.