Section 80TTA Deduction for Saving Bank Interest Income
Section 80TTA of Income Tax Act is introduced with effect from April 01, 2013 and will apply from AY 2013-14 and onwards for giving deduction of saving Bank interest to Individual and HUF. However it has been amended by Finance Act 2018 to disallow this deduction to Senior citizen because senior citizen ( 60 years or above) can claim deduction u/s 80TTB
Video Explantion of Section 80TTA of Income tax Act
Commentary on Section 80TTA of Income Tax Act
- Section 80TTA of Income Tax Act is introduced with effect from April 01, 2013 and will apply from AY 2013-14 and onwards .
- Applicability : Section 80TTA of Income Tax Act is available only to individual or a Hindu undivided family ( whether Resident or Non resident )
- Section 80TTA is available only for Saving Bank interest from Banks/ Cooperative Bank and Post Office.
- Section 80TTA is not applicable for interest on Fixed Deposit .
- Maximum Deduction : under Section 80TTA of Income Tax Act ,the deduction allowed is interest received on eligible saving accounts or Rs. 10,000 whichever is lower.
If interest earned is more than 10,000 then balance amount will be taxable as before i.e considered as Income from Sources and taxed as per your slab rate. - The deduction of Section 80TTA of Income Tax Act is in addition to deduction of Rs. 1.50 Lakh of section 80C of the Income Tax Act-1961.
- Amendment for Senior Citizen:- Section 80TTA of Income Tax Act has been amended From FY 2018-19 (AY 2019-20). Deduction u/s 80TTA is not available to the senior citizen who is eligible to claim deduction u/s 80TTB. Deduction u/s 80TTB is available to resident senior citizen( i,.e atleast 60 years of age at any time during the previous year.)
- TDS : The interest earned on savings account is exempted from TDS under Section 194A of Income Tax Act i.e No TDS is deducted on interest from saving account.
Post office savings bank interest exemption under section 10(15)(i) of Income Tax Act
Post office savings bank interest is exempt up to Rs. 3500 (in an individual account) and Rs. 7000 (in a joint account) under section 10(15)(i) by virtue of Notification No. 32/2011, dated June 3rd 2011 read with Notification No. GSR 607, dated June 9, 1989. The cumulative impact of section 10(15)(i) and 80TTA as follows:
| Up to the Asessment year 2011-12 Rs. | For the Assessment year 2012-13 Rs. | From the Assessment Year 2013-14 Rs. | |
| Interest on Post Office saving Bank (exemption under section 10(15)(i) | Full Exemption, nothing is taxable | Exemption up to Rs. 3500 in a single account and Rs. 7000 in a joint account | Exemption up to Rs. 3500 in a single account and Rs. 7000 in a joint account |
| Interest on savings account with a bank, co-operative bank and Post office (deduction under section 80TTA) | No deduction | No deduction | Deduction up to Rs. 10000 [ From AY 2019-20 , Not available to Senior Citizen (60 years or above) |
Bare Act of Section 80TTA
[ Section 80TTA Inserted by the Finance Act, 2012, w.e.f. 1-4-2013. ]
Deduction in respect of interest on deposits in savings account.
80TTA. (1) Where the gross total income of an assessee 1[(other than the assessee referred to in section 80TTB)], 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 in section 51 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) | a Post Office8 as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898), |
there shall, in accordance with and subject to the provisions of this section, 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 this section is 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 this section in 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 this section, “time deposits” means the deposits repayable on expiry of fixed periods.]
Note on Section 80TTA of Income Tax Act
- Italicised words shall be inserted by the Finance Act, 2018, w.e.f. 1-4-2019. ( from FY 2018-19/ AY 2019-20 )
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