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).
On the other hand, senior citizens can benefit from a larger deduction of Rs 50,000 per annum on both savings and FD interest under Section 80TTA. Savings account interest over Rs 10,000 is taxed at your slab rate under the heading 'Income from Other Sources.' Section 80TTA was included in the 2013 Finance Bill and became effective for the 2012-13 fiscal year.
When interest on deposits is included in a taxpayer's gross total Income, that Income is tax-free. Therefore, individual taxpayers, Hindu undivided families, and members of Hindu undivided families are all eligible.
The interest income must originate from a deposit in a savings account with-
When calculating total Income, the assessee can claim tax exemption. The interest income from time deposits is not free from taxation. A time deposit is a deposit that is repayable after a set time and at a set interest rate.
As a result, the exception is not permitted in the following situations:
Section 80TTA allows the following taxpayers to seek deductions-
Any deposit in a savings account has interest revenue. The account is kept by or for the use of-
A business company is a group of individuals or a group of people.
Then no deduction would be let to any firm association member, partner, or individual member of the body. These taxpayers would not be able to deduct interest income when calculating their total Income.
In general, a company, AOP, or BOI cannot claim the interest deduction. And the partner or member is paid by these companies, AOP or BOI. So they are unable to claim the deduction. Furthermore, senior folks are not eligible for the 80TTA reduction.
You must first enter the interest income as interest income under the heading ' Income from other sources.' Then you must claim a tax deduction under Section 80 Deductions under Section 80TTA.
Non-Indian Residents can only open NRE and NRO accounts. The interest on the NRE accounts is tax-free. The 80TTA advantage is only accessible on NRO savings accounts. Please keep in mind that no deductions are permitted on NRO term deposits.
The interest that has been received from a savings account is deductible up to Rs.10,000 in Section 80TTA. If an individual has multiple accounts with different banks, the maximum deduction for all savings accounts is Rs.10,000/-. The deduction under Section 80TTA is greater than the 1.5 lakh limit under Section 80C.
Section 80TTA applies to savings accounts held by the following institutions: