Income Tax on Savings Bank Interest under Section 80TTA

The tax will differ each financial year based on the amount which was available in your savings account in that tenure. To dive deep into this, you have to gather all your savings account statements for the last financial year.

Go through the statement to find out the interest earned from your savings account. You can find it in the deposit column. Interest amount is shown on your statement as a quarterly, biannual, or annual based on your bank.

When it comes to the biannual interest payout, the bank pays the interest for the last financial year. This is common in most of the banks’ savings accounts. Here, you can get the help of the bank officials on how to calculate the interest earned in that particular financial year.

Next, consider all the interest earned by you and add that amount. If the interest accrued is more than Rs.10,000 should be mentioned in the income section while doing tax calculations.

What is Section 80TTA?

Section 80TTA is a deduction done in respect of interest earned on deposits in savings bank account. Section 80TTA of the Income Tax Act enables the depositors to claim deductions on savings accounts which are held in banks, post office, or cooperative societies.

What is Section 80TTB?

Section 80TTB is a provision where a taxpayer who is 60 years of age and above can claim a particular amount as a deduction from their gross total income for that financial year.

Eligibility for claiming Deduction under Section 80TTA

The following entities can claim deductions under section 80TTA

1. Individual Taxpayers
2. Hindu Undivided Families

Both entities mentioned above can claim deductions under Section 80TTA provided that they hold savings accounts with the following:

1. Banks
2. Co-operative banks or a co-operative society carrying on the business of banking
3. Post Office

Who is ineligible to claim Deduction under Section 80TTA

The following entities are ineligible to claim deductions under section 80TTA

1. Firms
2. Association of Persons
3. Body of Individuals
4. Company Assessees

Features of Deductions under Section 80TTA

1. Deduction can be claimed only up to Rs 10,000 on the interest earned on the savings bank account. However, tax will have to be paid on any amount over and above Rs 10,000
2. Deduction under Section 80TTA is applicable over and above deduction of Rs 1.5 lakh under Section 80C
3. Deduction under Section 80TTA is applicable on Rs 10,000 on the combined saving bank accounts interest

When is Deduction under Section 80TTA not Applicable?

Deduction under Section 80TTA is not applicable on the following:

1. Interest received on Fixed Deposits
2. Interest received on Time Deposits
3. Interest received on Term Deposits

How to claim Deduction under Section 80TTA?

Taxpayers can claim deductions under Section 80TTA as per the following procedure:

1. When filing returns, add total interest income under the head ‘income from other sources’
2. Claim deduction under Section 80TTA on Rs 10,000 if interest received is more than Rs 10,000. If less than Rs 10,000, then tax need not be paid since the entire amount is deductible under Section 80TTA.