Table of Contents
- 1 Deduction on Interest on Savings Account Deposit – Section 80TTA
- 2 Maximum Deduction under section 80TTA
- 3 What is Section 80TTA?
- 4 Eligible Interest U/s 80TTA
- 5 Maximum Amount of Deduction under Section 80TTA
- 6 How to Claim deduction U/s 80TTA
- 7 FAQ’s on Section 88TTA
Deduction on Interest on Savings Account Deposit – Section 80TTA
Here’s a quick guide on claiming the deduction on interest under section 80TTA of the Income Tax Act. In this post, you’ll learn about: What is section 80TTA, Eligibility for Section 80TTA, Maximum amount of deduction (deduction limit), How to claim the deduction, etc.
Section 80TTA is one of the important sections of deduction listed under section 80C of the Income Tax Act. It is a part of Section 80C.
The objective behind introducing this section is – Government encouraging the citizen to save
Maximum Deduction under section 80TTA
The deduction allowed is interest received on eligible saving accounts or Rs. … The deduction is in addition to a deduction of Rs. 1.50 Lakh of section 80C of the Income Tax Act-1961.Jul 25, 2018
What is Section 80TTA?
Section 80TTA of the Income Tax act talks about the provision of deduction in respect of interest earned on Savings account deposits with Bank (including co-operative banks or post office).
This deduction is allowed to an Individual or HUF only. Maximum amount of deduction is Rs 10,000 or actual interest received whichever is lower.
Section 80TTA provides a deduction of Rs 10,000 on interest income. This deduction is available to an Individual and HUF.
Eligible Interest U/s 80TTA
Interest earned on Savings Account only is eligible for deduction under section 80TTA. Interest earned on time deposits such as fixed deposits, recurring deposits is not eligible for deduction.
Therefore, deduction allowed for interest earned from –
- Savings account with a bank
- Savings account with a co-operative bank
- Savings account with a post office
This deduction NOT allowed in respect of interest earned on TIME DEPOSITS such as fixed deposits, recurring deposits or any other time deposits.
Maximum Amount of Deduction under Section 80TTA
The maximum amount of deduction allowed under section 80TTA is restricted to Rs 10000.
Least of the following allowed as deduction:
- 10000 or;
- Actual interest earned
Example1- If your interest income from all the savings bank account in aggregate is Rs.8000, the entire interest income shall be eligible for deduction.
Example2- If your total interest income exceeds Rs.10000, then deduction shall be restricted to Rs.10000 (maximum deduction limit).
How to Claim deduction U/s 80TTA
How to claim the deduction –
Step1- Find out the total interest income from all the Savings account you held
Step2- Choose the applicable ITR form to file your Income Tax Return
Step3- Add your total interest income under the head “INCOME FROM OTHER SOURCES” in your ITR form
Step4- Go to the deductions section of Section 80 in ITR.
Step5- Deduction amount shall be reflected (auto-populated) under the corresponding field of section 80TTA under section 80
FAQ’s on Section 88TTA
1. What is the maximum deduction limit u/s 88TTA?
Section 88TTA deduction amount is restricted to Rs.10000. Thus, the maximum deduction allowed under this section is Rs.10000 or actual interest earned, whichever is lower.
2.Who is eligible for Section 88TTA deduction?
Deduction u/s 80TTA is available to an Individual or Hindu Undivided Family (HUF) only. Company/Firm/AOP/BOI is not eligible for deduction under this section.
3.Is section 80TTA applicable on FD Interest?
Deduction u/s 80TTA is applicable on Savings account interest income only. Time deposits such as fixed deposits (FD) or recurring deposits (RD) interest income not included.
4.Is section 80TTA applicable for Senior Citizens?
Sec. 80TTA applies only to an individuals or HUF other than senior citizens (those above 60 years of age).
There’s a dedicated section 80TTB for Senior citizens to claim deduction on interest income. Therefore, they can claim a higher deduction of Rs.50000 (maximum) U/s 80TTB. Interest income from savings as well as time deposits both is allowed under section 80TTB.
5.Can an Individual claim both 80TTA & 80TTB?
No. Section 80TTA is applicable for an Individual other than senior citizens. For Senior citizens sec.80TTB applies.