TAX DEDUCTION UNDER SECTION 80TTA – DEDUCTION ON SAVINGS INTEREST

Section 80TTA is the deduction on saving bank or post office interest up to Rs. 10,000/- applied for INDIVIDUAL or HUF and non-senior citizen. The Maximum limit should be claimed under this section is Rs. 10,000/-

Some features of  Deduction Under Section 80TTA is-

·  The tax exemption from interest income in the savings account is limited up to ₹10,000 per annum

·  This deduction is for the savings accounts held by individuals and Hindu Undivided Family (HUF)

·  A person can have multiple savings accounts with different banks. But the cumulative interest income from all those accounts together should be under ₹10,000 to get a complete exemption

·  In case, the total cumulative interest-earning exceeds 10,000 from savings accounts, then tax exemption could be claimed for ₹10,000 only. The additional income in this respect will be subject to income tax.  

·  The tax deduction under Section 80TTA  is over and above the deduction of ₹ 1.5 lakhs, which is deducted under Section 80C.

This deduction is allowed on interest earned –

• From a savings account with a bank
• From a savings account with a co-operative society carrying on the business of banking
• From a savings account with a post office

This deduction is NOT allowed on interest earned on time deposits. Time deposits mean deposits repayable on expiry of fixed periods. It shall not be allowed for –

• Interest from fixed deposits
• Interest from recurring deposits
• Any other time deposits

Exclusion from 80TTA

Deposits with companies or Non-Banking Finance Companies (NBFCs) will not get the benefit of this section.

Fixed Deposits with banks will not get the benefit of this section, only savings accounts will.