What is section 80TTA?
Every quarter bank credits interest to your savings account. This savings interest is considered as your taxable income under the head “Income From Other Source”. Section 80TTA of the Income Tax Act allows a deduction up to Rs. 10,000 on such interest.
Who can claim savings interest deduction u/s 80TTA?
This deduction was introduced to encourage taxpayers to generate more savings. It is available to individual and HUF other than a senior citizen. Section 80TTB is applicable in the case of a senior citizen.
What is the deduction limit u/s 80TTA?
Maximum deduction allowed under section 80TTA is Rs. 10,000 for FY 2018-19 (AY 2019-20). If interest income from all the saving accounts is less then Rs. 10,000 then the entire amount is deductible. If total interest from saving accounts exceeds Rs. 10,000 then the maximum of Rs. 10,000 will be deductible and the remaining amount will be taxable.
Which interests are eligible for deduction u/s 80TTA?
Following interests are eligible for a savings interest deduction under section 80TTA:
- Interest earned from Saving Account with Bank,
- Any interest earned from Saving Account with Co-operative Society,
- Interest earned from Saving Account with Post Office.
Following interests are not eligible for deduction u/s 80TTA:
- Interest earned from fixed deposits,
- Any interest earned from recurring deposits,
- Interest earned from any other time deposits.
How to claim savings interest deduction u/s 80TTA?
You can claim a deduction by filing your ITR. First, you need to add total saving interest as income under the head “Income From Other Source”. And then enter the same amount as a deduction under Chapter VI-A.
No. TDS is not applicable on saving bank account interest. However, if it is NRO account then TDS is applicable.
Yes, an NRI can claim a deduction on saving bank account interest under section 80TTA.
The bank account statement is required to calculate and claim deduction under section 80TTA.