How to claim deduction on interest with Section 80TTA?

Did you know that the interest you earn on the money lying in your savings account is taxable? However, deduction is also available on this income under Section 80TTA of the Income Tax Act.

 

What is Section 80TTA of the Income Tax Act?

Section 80TTA of the Income Tax Act allows taxpayers in India to enjoy deductions on their savings. The amount of deduction claimed under Section 80TTA is capped at Rs 10,000. The 80TTA deduction is over and above the Rs 1.5 lakhs limit prescribed under Section 80C.

 

What is Section 80TTA Deduction?

80TTA provides for ‘deduction in respect of interest on deposits in savings account’ in the income tax law. 80TTA deduction can be claimed on any number of savings held in banks, post office or cooperative societies, for an amount up to Rs 10,000.

 

What Is the Maximum Deduction Acceptable Under Section 80TTA?

In case your savings accounts interests are more than Rs 10,000 in a financial year, the excess interest is added to your total income and income tax is charged accordingly.

 

See also: A guide to checking income tax refund status

 

Applicability of Section 80TTA

Section 80TTA applies only on savings accounts. 80TTA does not cover term deposits, fixed deposits, or recurring deposits. 80TTA deduction is allowed on interest earned on the following savings accounts:

• Savings account of a bank
• Savings account with a co-operative society
• Savings account with a post office

See also:Everything you need to know about Cooperative Housing Society

 

Who can claim deductions under 80TTA?

Individuals and Hindu Undivided Families can claim deductions on savings interest under Section 80TTA.

See also: All about HUF

 

Can NRIs claim 80TTA deductions?

Residents, as well as non-resident Indians, can claim 80TTA deductions.

 

How to claim 80TTA deduction?

To claim deduction under Section 80TTA, calculate the total interest income in the ITR form under the head ‘income from other sources’. 80TTA deduction will be shown under Section 80 deductions.

 

FAQs

When is Section 80TTA applicable?

Section 80TTA offers deduction on interest earned on money lying in your savings account in a bank or post office or co-operative society.

What is the maximum deduction I can claim under section 80TTA?

You can claim up to Rs 10,000 as deduction under Section 80TTA in a financial year.