TaxSaral

Section 153 · was Section 80TTB in the 1961 Act

Senior Citizen Deposit Interest (₹50,000)

For taxpayers aged 60+, deduction up to ₹50,000 on interest from all deposits — savings accounts, FDs, and RDs — with banks and post offices. For senior citizens it replaces the ₹10,000 savings-interest deduction in the same section.

Who it applies to: Resident individuals aged 60 years or above using the optional tax regime.

Key points

  • Covers ALL bank deposits — savings, FD, RD — unlike the ₹10,000 savings-only deduction available to other taxpayers.
  • Maximum deduction ₹50,000 per year regardless of actual interest earned.
  • Senior citizens cannot claim the ₹10,000 savings-interest deduction — the ₹50,000 senior-citizen deduction replaces it entirely.
  • Post office savings deposits also qualify. This gives significant relief to retirees living on FD income.

Worked example

Retired couple maximising deposit interest deduction

Retired couple (both aged 68) have FDs totalling ₹50L earning ₹3.5L in annual interest. They file separately.

Per taxpayer deduction limit: ₹50,000

Husband:
  FD interest income: ₹1,75,000 (50% of joint FD)
  Section 153 deduction: ₹50,000
  Taxable interest: ₹1,25,000

Wife (same structure):
  FD interest income: ₹1,75,000
  Section 153 deduction: ₹50,000
  Taxable interest: ₹1,25,000

Tax on ₹1,25,000 at 5% slab (after ₹4L nil slab): Nil (income below ₹4L threshold for each)

Result: By splitting FDs between husband and wife and each claiming ₹50,000 deduction, the couple eliminates their interest income tax entirely (both have total income ≤ ₹4L nil slab). Strategic joint deposit allocation is a key retirement tax planning tool.

Related sections

Not sure how Section 153 applies to you? Ask a question or browse all sections.

Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.