Section 80TTA of the Income Tax Act 1961 is the section which grants deductions on interest for a savings account, up to Rs.10,000/-. This exemption is allowed for all individuals and HUFs other than senior citizens (those above the age of 60) because they have a separate 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.
The deduction is only valid for savings accounts held by individuals or Hindu United Families (HUF).
Like resident Indians, Non-Resident Indians (NRIs) also have eligibility for deductions under Section 80TTA. Since NRIs are only eligible for NRE and NRO accounts and given the interest earned on NRE accounts is tax-free, this only applies to NRO savings accounts, and not NRO term deposits which are liable to TDS at the rate of 30.9%
The exclusions from 80TTA are:
The Government taxes the interest that one accrues on their savings account. Section 80TTA of the Income Tax Act, 1961 deals with the tax deductions granted on this interest. This deduction is applicable for savings accounts held by individuals or Hindu United Families (HUF). The maximum deduction that can be claimed for all savings accounts is Rs.10,000. Also, for those who have Income less than the lowest Tax slab, they get an additional Rs.10,000 over the permissible Rs.1.5 lakh under Section 80C.
Hence, we have now explained all the minutiae of Section 80TTA, and its various features and criteria. Now, let’s solve some common queries that most people have regarding Section 80TTA:
Ans: No, Tax deduction under Section 80TTA is not allowed in the case of fixed deposit.
Ans: Yes, you are eligible for Tax Deduction under Section 80TTA if you have a Savings Bank account under a registered Cooperative Society
Ans: No, unless your 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. Hence, no of the deductions are required.
Ans: No, it cannot be claimed as 80 TTA can be claimed only if the assessee has earned interest income from the savings account.
Ans: Earlier, the RBI had fixed the interest rate for a savings account at 4%. This rule has been relaxed, hence, nowadays the Banks offer around 6% interest rate, which is calculated on the daily balance. This implies you can get an even higher rate than on previous occasions, and you can keep a tab of the same by checking your bank statement.
Ans: If the Gross Income of an Individual is below the exemption limit, no deduction will be applicable.
Ans: No, the deduction can be claimed by Senior citizen up to Rs.50,000 under section 80TTB. (Link of Section 80TTB will be added)
Ans: Yes, Section 80TTA can be claimed by NRIs like resident Indians.
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