Section 80TTA

Most of the individuals own a savings bank account. However, only a few know that the interest received on it is taxable under the ‘Income from other sources' head. But, there's Section 80TTA to the rescue that can save taxes on interest received up to Rs 10,000.

Let's discover more about this section of the Income Tax Act.

What is Section 80TTA

Section 80TTA deduction of the Income Tax Act allows the deduction of up to Rs 10,000 per year on savings account interest. Except for senior citizens, it applies to all individuals and HUFs (those above 60 years).

• Section 80TTA deduction was included in the 2013 Finance Bill and became effective for the 2012-13 fiscal year.
• Remember, the deduction available under Section 80TTA is over and above the Rs 1,50,000 limit of Section 80C.
• Also, note that Section 80TTA is not applicable to senior citizens who are 60 years or older as Section 80TTB applies to them as per the Act.

Type of Interest Incomes Allowed and Not Allowed as Deduction Under Section 80TTA

The table below illustrates the interest incomes allowed and not allowed as deduction under Section 80TTA-

80TTA Deduction Limit

The interest that has been received from a savings account is deductible up to Rs.10,000 in Section 80TTA of Income Tax Act. If an individual has multiple accounts with different banks, the maximum deduction for all savings accounts is Rs.10,000.

How to Claim the 80TTA Income Tax

To claim a deduction under Section 80TTA, follow the steps mentioned below-

• Determine Eligibility

The first step is to determine your eligibility. You should be an individual or a HUF to claim the deduction. Note companies, partnerships, LLPs, etc., are not permitted to claim deduction under Section 80TTA.

• Compute Interest Income

Next, calculate the total interest income attained from savings accounts and cooperative societies during the financial year.

• Determine Deduction Amount

Section 80TTA allows a maximum deduction of Rs 10,000. If an individual's total interest income is less than or equal to Rs 10,000, they can claim the complete amount as a deduction.

• Add in Total Income

The next step is to add the interest income to your total income while calculating your tax.

• File Your ITR

While filing ITR, ensure to add the interest income under 'Income from Other Sources' and claim a deduction under Section 80TTA.