- What is Deduction under section 80TTA?
- Who can Claim Savings Interest Deduction Under Section 80TTA?
- What is the Deduction Limit Under Section 80TTA?
- Which Interests are Eligible for Deduction Under Section 80TTA?
- How to Claim Savings Interest Deduction Under Section 80TTA?
- How is the Deduction Calculated Under Section 80TTA?
- Comparison between Section 80TTB and 80TTA
- ITR Form Applicable for Section 80TTA
What is Deduction under 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 was introduced in order to allow a deduction of up to INR 10,000 on such interest.
Who can Claim Savings Interest Deduction Under Section 80TTA?
80TTA deduction was introduced to encourage taxpayers to generate more savings. It is available to individuals and HUFs other than senior citizens. Section 80TTB is applicable in the case of a senior citizen.
What is the Deduction Limit Under Section 80TTA?
The maximum deduction allowed under section 80TTA of Income Tax Act is INR 10,000 for FY 2018-19 (AY 2019-20). If interest income from all the saving accounts is less then INR 10,000 then the entire amount is deductible. If 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.
Which Interests are Eligible for Deduction Under Section 80TTA?
Following interests are eligible for a savings interest deduction under this section:
- 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 under this section:
- Interest earned from fixed deposits,
- Any interest earned from recurring deposits,
- Interest earned from any other time deposits.
How to Claim Savings Interest Deduction Under Section 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.
How is the Deduction Calculated Under Section 80TTA?
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 2019-20:
- Interest earned from Union Bank Savings Account: INR 16,000
- Interest earned from Post Office FD: INR 24,000
- Interest earned on Debentures: INR 3,500
Ms Desai will be able to claim deduction under section 80TTA only on the interest earned from Union Bank Savings Account and the eligible deduction that is available u/s 80TTA that she can claim is INR 10,000.
Comparison between Section 80TTB and 80TTA
|Parameters||Section 80TTB||Section 80TTA|
|Eligibility||Only senior citizens||Individuals and HUFs can also claim deductions|
|Exemption Limit||Maximum INR 50,000 a year||Maximum INR 10,000 a year|
|Specified Income||Deduction on interest from all kind of deposits||Deduction on interest from the savings account only|
|Applicability for NRI’s||NRI’s are not eligible to claim deductions under 80TTB||NRI and NRO’s who have a savings account can claim deduction u/s 80TTA|
ITR Form Applicable for Section 80TTA
The taxpayer can claim deductions under this section while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80TTA in any of the ITR forms, i.e, ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.
In the case of Section 80TTA, along with the common documents such as Form 16, you only need to show present your bank statements showing your transactions of savings account for calculating the interest earned and the deductions.
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.
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.
No, a senior citizen can claim deduction under section 80TTB and not section 80TTA
Yes, the deduction of INR 10,000 under section 80TTA is available over and above the deduction of INR 1,50,000 availabe under section 80C.