Under Section 80TTA of the Income Tax Act, 1961, you are allowed to claim a deduction on your savings account deposits. It allows a deduction of up to ₹10,000 on savings account interest income. To be eligible, these accounts must be held in a cooperative society, bank, or post office.
This section has been a part of the Finance Bill since 2013 and has been providing tax-relief to taxpayers since. The Indian Government has come up with such tax benefits on basic savings accounts to encourage citizens to make small savings.
Below mentioned are a few features of Section 80TTA:
Eligible persons can own several savings accounts with different banks
Total interest amount of all accounts should not exceed ₹10,000
Deductions u/s 80TTA is beyond the deduction of ₹1.50 Lakhs u/s 80C
Section 80TTA is not applicable if the gross total income is below the taxable limit
The deductions u/s 80TTA can be claimed by the below persons:
Hindu Undivided Family (HUF) and individuals
Non-residents of India who own Non-resident Ordinary (NRO) savings accounts
Entities with savings account at eligible financial institutions
Below mentioned are a few exclusions under Section 80TTA:
Section 80TTA is not applicable if the gross total income is below the taxable limit
Senior citizens are not eligible for claiming deductions
The tax deduction under this section are not applicable to the following deposits:
Term Deposits
Fixed Deposits
Recurring Deposits
Deposits from Non-banking Financial Companies (NBFCs)
Non-resident External (NRE) accounts
Since it’s important to know about the differences between the provisions of sections 80TTA and 80TTB, here’s a table outlining the same:
Parameters |
Section 80TTA |
Section 80TTB |
Eligibility Criteria |
Hindu Undivided Family (HUF) and individuals |
Senior citizens aged over 60 years |
Applicable Instruments |
Savings accounts and NRO accounts |
Savings bank accounts and fixed deposits |
Exemption Limit |
Up to ₹10,000 / year |
Up to ₹50,000 / year |
The purpose of Section 80TTA is to promote improved financial management. As a result, it saves people from having to worry about including insignificant interest amounts when submitting their tax returns. This helps them avoid paying tax on income from modest deposits.
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FAQs
Yes. As per the Income Tax Act, individuals who are filing ITR must disclose certain details pertaining to the interest amount earned during the filing period. Additionally, they must pay the applicable taxes.
Yes, the section 80TTA of the Income Tax Act is applicable to the current financial year, i.e FY 2022-23.
You will have to pay a penalty for non-compliance. Which means, you will have to pay the required taxes along with the interest amount.
Hindu undivided families and Individuals can claim tax deductions u/s 80TTA.
No. You cannot claim any tax deduction u/s 80TTA if you earn an interest income from your house property or capital gains.
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