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TMI BlogStatutory deduction for interest income derived from deposits : Clause 153 of the Income Tax Bill, 2025 Vs. Section 80TTA of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in many respects a re-casting, of the existing Section 80TTA of the Income-tax Act, 1961, which currently governs deductions for interest earned on savings account deposits. Section 80TTA, introduced by the Finance Act of 2012 and effective from the assessment year 2013-14, was a significant measure to provide relief to individual and HUF taxpayers in respect of interest income from savings accounts, thereby fostering a culture of savings and financial inclusion. The subsequent introduction of Section 80TTB in 2018 created a higher threshold for senior citizens, reflecting evolving policy priorities. Clause 153, as proposed in the Income Tax Bill, 2025, seeks to consolidate, expand, and clarify the scope of such deductions, introducing n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantum of deduction based on the class of assessee and type of deposit. * Sub-section (3): Excludes certain entities (firms, AOPs, BOIs) from availing the deduction indirectly. * Sub-section (4): Defines "time deposits." 3.2. Eligible Assessees Clause 153(1) expands the scope of eligible assessees by explicitly mentioning: * (a) Individuals, not being senior citizens; * (b) Individuals, being senior citizens; * (c) Hindu Undivided Families (HUFs). This is a departure from Section 80TTA, which covers only individuals and HUFs, with senior citizens excluded by virtue of Section 80TTB. Clause 153 amalgamates the treatment of all individuals, including senior citizens, within a single provision, but with differential deduction li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iduals (BOI), preventing partners or members from claiming the deduction indirectly. 3.6. Definition of Time Deposits Clause 153(4) defines "time deposits" as deposits repayable on expiry of fixed periods, identical to the explanation in Section 80TTA. 4. Practical Implications 4.1. Impact on Taxpayers * Non-Senior Individuals and HUFs: The deduction quantum and conditions remain largely unchanged from Section 80TTA. Interest up to Rs. 10,000 from savings accounts (excluding time deposits) is deductible, thus maintaining status quo for this class. * Senior Citizens: The most significant impact is on senior citizens, who are now included within the same provision, with a higher deduction limit of Rs. 50,000, and crucially, on both sav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under 80TTB) Eligible (higher limit) HUFs Eligible Eligible Firms/AOPs/BOIs Not eligible, including indirect claims Not eligible, including indirect claims 5.2. Quantum and Nature of Deduction Aspect Section 80TTA Clause 153 Deduction Limit (non-senior individuals/HUFs) Rs. 10,000 (savings accounts only, excluding time deposits) Rs. 10,000 (savings accounts only, excluding time deposits) Deduction Limit (senior citizens) Not applicable (see 80TTB: Rs. 50,000, including time deposits) Rs. 50,000 (savings and time deposits) Time Deposits Not eligible (for any assessee under 80TTA) Eligible for senior citizens only 5.3. Eligible Institutions Both provisions allow interest from: * Banking companies u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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