Introduction
Section 80TTA of the Income Tax Act grants a deduction on savings account interest up to Rs 10,000 per annum. It applies to all individuals and HUFs other than senior citizens (those above 60 years). Senior citizens can instead take advantage of a bigger deduction of Rs 50,000 per annum on both savings and FD interest under Section 80TTB. Savings Account Interest above Rs 10,000 is taxable under the head ‘Income from Other Sources’ at your slab rate. Section 80TTA was introduced in the Finance Bill of 2013 and became applicable from the Financial Year of 2012-13 onwards. Read on to know more about section 80TTA of the income tax act including its features, deduction limit, exclusions, and more..
Who is eligible for Section 80TTA?
The section is applicable to individual taxpayers and Hindu Undivided Families (HUFs). The deduction is available on the interest earned on savings accounts held with banks, co-operative societies, and post offices. The maximum deduction available under Section 80TTA is Rs. 10,000. The tax deduction under Section 80TTA is over and above the deduction of ₹ 1.5 lakh, which is deducted under Section 80C.
What types of interest income are eligible for deduction under Section 80TTA?
The following types of interest income are eligible for deduction under Section 80TTA:
- Interest income earned on a savings account held with a bank or post office.
- Interest income earned on savings accounts held with co-operative societies.
- It is important to note that the deduction under Section 80TTA is available only on the interest income earned by individuals and HUFs and not on the principal amount invested.
What are the conditions for claiming deduction under Section 80TTB?
To claim a deduction under Section 80TTA, the following conditions must be fulfilled:
- The taxpayer should be an individual or HUF.
- The interest income should be earned on savings accounts held with banks, co-operative societies, or post offices.
- The maximum deduction allowed under Section 80TTA is Rs. 10,000. In case your savings bank interest income is less than Rs. 10,000, the entire interest income will be your deduction. If your interest income is more than Rs.10,000, your deduction will be limited to Rs. 10,000.
Conclusion:
Thus, Section 80TTA gives relief to the investors since they do not have to keep track of the small amounts of interest that gets accrued in their savings accounts and do not need to include those for computing taxable income. This tax deduction is a breather for them to avoid any penalty of non-payment of taxes on some petty incomes. On the other hand, people having lower to middle income and who have to pay some marginal amount of tax will get the additional benefit of ₹10,000 beyond the tax deduction of ₹ 1.5 lakh under Section 80C.
If you have any further questions or concerns regarding Section 80TTA, contact us today. Our team of experts are always available to assist you with any tax-related matters.
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