Section 80TTA: Deduction for Saving Account Interest

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Hiral Vakil

HUF
IFOS
Section 80TTA
Last updated on January 18th, 2024

Everyone has a savings account and earns interest on a balance available monthly, quarterly, or yearly basis. But, most of us are unaware that interest earned in the savings account is subject to taxation as ‘Income from other sources’. However, taxpayers can also claim the deduction of such amounts under section 80TTA as a part of the government’s efforts to encourage them to save money.

Section 80TTA

Bank credits interest to the savings accounts every month, quarter or year based on their policies. This savings interest earned is the taxable income under the head “Income From Other Source.” Further, it is allowed to claim the deduction of such interest income under section 80TTA up to INR 10,000. Hence, this section provides relief to taxpayers from paying excess taxes.

Eligibility to claim deduction u/s 80TTA

Resident Individuals below the age of 60 years and HUFs can claim the deduction under this section while filing ITR. However, if the resident individual is a senior citizen (age more than 60 years) or a super senior citizen (age more than 80 years) then they have to claim a deduction under Section 80TTB. Further, an NRI holding an NRO account can also claim the deduction of interest received in such an account under section 80TTA.

From AY 21-22, if the taxpayer opts for new tax regime, they cannot claim 80TTA deduction
Tip
From AY 21-22, if the taxpayer opts for new tax regime, they cannot claim 80TTA deduction

Deduction limit u/s 80TTA

The maximum deduction allowed under this section is INR 10,000 for the relevant assessment year.

If interest income from all the savings accounts is less than INR 10,000 then the entire amount is deductible. However, if the total interest from saving accounts exceeds INR 10,000 then the maximum of INR 10,000 will be deductible and the remaining amount will be taxable.

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Eligible interests u/s 80TTA

The following interests are eligible for deduction under this section:

The following interests are not eligible for deduction under this section:

In order to understand the calculations better, let us take an example;

Ms. Desai is a resident individual. And has earned the following income during the FY 2022-23:

As per the rule, Ms. Desai will be able to claim a deduction only on the interest earned from her Union Bank Savings.

Particulars Amount
Union bank Savings Interest16,000
Total Interest Income Exemption10,000
Interest Income taxable6,000
Post Office Interest24,000
Debenture Interest3,500
Total Taxable Interest33,500
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How to Claim Savings Interest Deduction?

The taxpayer can claim deductions under this section while filing ITR if all the above-mentioned conditions are fulfilled. Individuals/HUFs can claim 80TTA in any of the ITR forms, i.e., ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources.

While filing an ITR, first, the taxpayer has to add total saving interest as income under the head “Income From Other Source”, and then enter the same interest amount as a deduction under section 80TTA under Chapter VI-A.

FAQs

Is TDS applicable on saving bank account interest?

No. TDS is not applicable to saving bank account interest. However, if it is an NRO account then TDS is applicable.

Can an NRI claim a deduction u/s 80TTA?

Yes, an NRI holding an NRO account can claim a deduction on saving bank account interest under section 80TTA.

What documents are required to claim deduction u/s 80TTA?

The bank account statement is required to calculate and claim deduction under section 80TTA.

For how many bank accounts can I claim a deduction u/s 80TTA?

There is no limit on the number of accounts or the interest that is earned via these accounts. One has to note that the maximum deduction that is available u/s 80TTA is INR 10,000 irrespective of the number of accounts.

Is the deduction that is available under section 80TTA over and above the deduction available under section 80C?

Yes, the deduction of INR 10,000 under section 80TTA is available over and above the deduction of INR 1,50,000 available under section 80C.

Got Questions? Ask Away!

  1. Hi @Swapnil_Agarwal,

    Yes, an NRI holding an NRO account can claim a deduction on saving bank account interest under section 80TTA.

    Hope it helps.

  2. Is a Deemed Resident (RNOR) eligible for sec 80TTA and sec 80TTB?

  3. Is Deemed Resident ( RNOR) eligible for sec 80TTA and sec 80TTB ?

  4. For interest income from recurring deposit with a cooperative society (non-agri), can deduction be claimed under section 80TTA ?

  5. Hey @S_Gupta

    Yes, you can claim a deduction under section 80TTA for interest amounts received on recurring deposits from cooperative societies.

    Hope this is helpful!