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Comprehensive Guide on 80TTA: Definition, limit, eligibility, exclusions for the FY 2019-20 (AY 2020-21), FY 2020-21 (AY 2021-22)
A Saving Bank Account is like a digital piggy bank on which interest is earned. Majority of the people have savings bank accounts but most of them are not aware of the taxability of interest earned on the savings bank account. Interest earned on a savings bank account is chargeable to tax under the head Income from Other sources and deduction of interest is also allowed u/s 80TTA.
Section 80TTA of the Income Tax Act 1961 provides deduction on the interest earned on your savings account with a bank, cooperative society or post office, up to Rs.10,000/-. No deduction for FD interest is available u/s 80TTA. This deduction is allowed to all individuals and HUFs other than super senior citizens (those aged 60 or more) because they have a separate deduction deduction Section 80TTB all to themselves.
Section 80TTA was introduced in 2013 as a part of the Finance Bill passed that year, and it became applicable from the financial year 2012-13 onwards and still holds good.
Individuals or Hindu Undivided Families (HUF) can claim a deduction under 80TTA on the interest earned on all their savings bank and post office accounts.
Like resident Indians, Non-Resident Indians (NRIs) are also eligible for deduction u/s 80TTA.
NRIs can open only NRE and NRO accounts in India. Interest earned on NRE accounts is tax-free. Hence, 80TTA benefit is available only on the NRO savings accounts. Please note that no deduction is allowed on NRO term deposits.
Rs.10,000 deduction is allowed u/s 80TTA on the interest earned from savings account.If a person has multiple savings accounts with different banks, then the maximum deduction that can be claimed for all savings accounts put together is Rs.10,000/-.
Deduction under section 80TTA is over and above the 1.5 lakh limit of Section 80C.
The savings accounts under the following institutions come under Section 80TTA :
The exclusions from 80TTA are:
Section 80TTA of the Income Tax Act, 1961 deals with the tax deductions granted on interest. This deduction is applicable for interest on savings accounts held by individuals or Hindu Undivided Families (HUF). The maximum deduction that can be claimed for all savings accounts is Rs.10,000. This deduction is over the permissible Rs.1.5 lakh under Section 80C.
No, Tax deduction under Section 80TTA is not allowed in the case of fixed deposit.
Yes, you are eligible for Tax Deduction under Section 80TTA if you have a Savings Bank account under a registered Cooperative Society.
No, till your total annual income is below the lowest tax slab. you don’t have to pay tax on the interest earned on your savings bank account even if it crosses Rs.10,000/- because there is no taxable income.
80 TTA can be claimed only if the assessee has earned interest income from the savings account.
No, the deduction can be claimed by Senior citizens up to Rs.50,000 under section 80 TTB.
Yes, Section 80TTA can be claimed by NRIs like resident Indians.
Under section 80TTA the limit is on the amount of interest and not on the number of the account you hold. Hence the tax benefit can be claimed for any number of accounts till the aggregate interest amount of Rs 10,000.
Ans. No there is no provision under the income tax act to deduct TDS on interest income received on saving accounts.
Earlier, the RBI had fixed the interest rate for a savings account around 4%. This rule has been relaxed, hence, nowadays the Banks offer around 6% interest rate, which is calculated on the daily balance. Section 80TTA has no relation with the interest rate. It provides a deduction on the interest amount earned on the savings account.
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