Section 80TTA Deduction- Interest on Saving deposits Deduction: Section 80TTA has been introduced from F.Y 2012-13 to provide deduction to anindividual ora Hindu undivided familyin respect of interest received on deposits (not being timedeposits) in a savings account banks, co-operative banks and post office.This deductionis restricted to Rs 10,000 only.
It is also proposed to provide that where the income referred to in this section is derivedfrom any deposit in asavings accountheld by, or on behalf of, a firm, an associationof persons or a body of individuals,no deductionshall be allowed under this section inrespect of such income in computing the total income of any partner of the firm or anymember of the association or any individual of the body.
The section is applicable witheffect from April 01, 2013and will apply from AY 2013-14 and onwards.
Here are thesalient featuresof this section:
- Maximum Deduction is Rs. 10,000 on interest received on your savings account deposits.
- This Deduction is over and above Section 80C Deduction
- The savings account can be held in any of the following financial institution:
- Bank
- Cooperative society
- Post office
- You can claim exemption on any number of savings accounts as long as the total amount you are seeking exemption on is less than Rs. 10,000.
- Deduction u/s 80TTA is applicable toindividual taxpayers and HUF only.This benefit is not available to a firm, an Association of Persons, a Body of Individuals, LLP or Company Assessee.
- 80TTA Deduction is not available on Fixed Deposit Interest
- Taxpayer is requested to note that this is a deduction not an exemption. So first it will be added in total income of the assess and then it will be allowed as deduction.
Below is extract of Section 80TTA as per Income Tax Act,1961
Deduction in respect of interest on deposits in savings account.
80TTA.
(1)Where the gross total income of an assessee, being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) in a savings account with
(a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to insection51 of that Act);
(b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
(c) a17aPost Office as defined in clause (k)ofsection2 of the Indian Post Office Act, 1898 (6 of 1898),
there shall, in accordance with and subject to the provisions of thissection, be allowed, in computing the total income of the assessee a deduction as specified hereunder, namely:
(i) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and
(ii) in any other case, ten thousand rupees.
(2) Where the income referred to in thissectionis derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under thissectionin respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
Explanation.For the purposes of thissection, “time deposits” means the deposits repayable on expiry of fixed periods.
This article has been Updated on 01.07.2018
