Section 80TTA of the Income Tax Act
Section 80TTA of the Income Tax Act provides a deduction on interest earned from savings accounts.
This deduction is separate from other deductions available under sections 80C, 80CCD, and 80D of the Income Tax Act. Taxpayers can claim this deduction in addition to other applicable deductions based on their eligibility.
What is section 80TTA?
Section 80TTA of the Income Tax Act 1961 provides a deduction on the interest earned on your savings account (with any bank, cooperative society, or post office) up to Rs.10,000.
No deduction for fixed deposits interest is available u/s 80TTA. This deduction is allowed to all individuals and HUFs other than senior citizens (those aged 60 or above). Senior citizens have a separate deduction under Section 80TTB.
Applicability of Section 80TTA
Deduction U/s 80TTA is available to Individuals and HUFs. It is not applicable to other types of entities, such as companies or partnerships.
This deduction is not available for senior citizens (those aged 60 or above) also. As they are eligible for a separate deduction under Section 80TTB.
Eligible Income and Accounts for 80TTA
This deduction is applicable to interest earned on savings accounts held with banks, cooperative societies, and post offices.
Non-eligible Income and accounts
The deduction under Section 80TTA does not apply to interest earned from:
- Fixed deposits,
- Recurring deposits, or
- other term deposits.
- Thus, it specifically covers interest earned from savings accounts only.
Deduction Limit under section 80TTA
The maximum deduction limit prescribed under section 80TTA is Rs.10,000. Therefore, taxpayers can claim a deduction for interest earned on savings accounts up to a maximum of Rs. 10,000 in a financial year.
Frequently asked questions (FAQs) regarding Section 80TTA
Here are some frequently asked questions (FAQs) regarding Section 80TTA of the Indian Income Tax Act:
Yes, it is applicable for the current financial year 2022-2023 (AY 2023-24).
Individuals and HUFs
The deduction limit is a maximum of Rs. 10,000 per financial year on interest earned from savings accounts.
Interest earned from fixed deposits, recurring deposits or other term deposits doesn’t qualify for the deduction.
Yes, Section 80TTA can be claimed by NRI’s.
No. Senior citizens are not eligible for 80TTA. There is a separate Section 80TTB, under which they can claim a deduction for interest on saving bank accounts and term deposits up to Rs.50,000.
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