Most of the individuals own a savings bank account. However, only a few know that the interest received on it is taxable under the ‘Income from other sources' head. But, there's Section 80TTA to the rescue that can save taxes on interest received up to Rs 10,000.
Let's discover more about this section of the Income Tax Act.
Section 80TTA deduction of the Income Tax Act allows the deduction of up to Rs 10,000 per year on savings account interest. Except for senior citizens, it applies to all individuals and HUFs (those above 60 years).
The table below illustrates the interest incomes allowed and not allowed as deduction under Section 80TTA-
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Type of Interest Incomes Allowed as Deduction Under Section 80TTA |
Interest Income Not Allowed as Deduction Under Section 80TTA |
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One can claim a deduction for interest income earned from-
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The deduction under Section 80TTA is not allowed for-
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The interest that has been received from a savings account is deductible up to Rs.10,000 in Section 80TTA of Income Tax Act. If an individual has multiple accounts with different banks, the maximum deduction for all savings accounts is Rs.10,000.
To claim a deduction under Section 80TTA, follow the steps mentioned below-
The first step is to determine your eligibility. You should be an individual or a HUF to claim the deduction. Note companies, partnerships, LLPs, etc., are not permitted to claim deduction under Section 80TTA.
Next, calculate the total interest income attained from savings accounts and cooperative societies during the financial year.
Section 80TTA allows a maximum deduction of Rs 10,000. If an individual's total interest income is less than or equal to Rs 10,000, they can claim the complete amount as a deduction.
The next step is to add the interest income to your total income while calculating your tax.
While filing ITR, ensure to add the interest income under 'Income from Other Sources' and claim a deduction under Section 80TTA.