• Mar
  • 23
  • 2012

S. 80TTA – Deduction in respect of interest on deposits in savings account

Section 80TTA is proposed to be introduced to provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits (not being time deposits) in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.

It is also proposed to provide that 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.

The section is applicable with effect from April 01, 2013 and will apply from AY 2013-14 and onwards.

Clarification Required

The above section been introduced but FM has forgot to give effect to other elements of the law having consequent cascading effects.  For example Salaried taxpayers, whose total income from salary and interest does not exceed Rs. 5 lakh, are exempted from filing tax returns provided their savings bank interest incomes do not exceed Rs. 10,000. In other words, while the ceiling on the total income is Rs. 5 lakh, within this overall limit, there is a Rs. 10,000 sub-ceiling on the interest earned. Question which arise is are as follows:-

  • Would a person be required to file a return if his savings bank interest is actually Rs. 20,000 but reduces to the required Rs. 10,000 on account of the deduction?
  • What happens in a case where the salary income is Rs. 5 lakh and savings interest is Rs. 10,000, making the total income Rs. 5.10 lakh and thus ineligible for the exemption from filing a return? Notably, in this case, on account of the new deduction on interest, the total income would reduce to Rs. 5 lakh. Then, would such a person be exempted from filing his/her tax return?

Hope Government will soon issue clarifications in respect of above.

Conclusion – The insertion of this new section has been a relief to individual or Hindu undivided family as interest on saving bank account was always a taxable income with no corresponding tax benefits. It would also help in avoiding inclusion of small savings bank interest in the taxable income, which was required to be done after deletion of section 80L.

Section 80TTA as introduced in Finance Bill 2012

Deduction in respect of interest on deposits in savings account.

80TTA. (1) Where the gross total income of an assessee, 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, 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 Office as defined in clause (k) of section 2 of the Indian Post Office Act, 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.’.


25 Responses to “S. 80TTA – Deduction in respect of interest on deposits in savings account”

  1. Sohan Bisht says:

    Sir, My income is from salary plus sb/ac interest plus fixed deposit interest is we deduct 10k from the interest income??? and should i clubbed the whole interest amount taking together for the purpose of claiming relief under section 80 TTA. 2. whether this is to be shown under the head “income from other sources ” (sb/ac interest plus fixed deposit interest) and can claim under section 80 TTA (both interest). Please clarify.

  2. Jitesh sapte says:

    I had earned Rs. 1,500/- from savings bank account in FY 2012-13. My consultant took the amount in Income from other sources but not took excemption in 80TTA.
    So, is any availed.

    And, my total income was Rs. 2,03,000/- and Deductions from LIC, Mediclaim was Rs. 17,000/-. So, net income was Rs. 1,86,000/-.

  3. ARIF KHAN says:

    Sir, Please be clear the deduction u/s80TTA applicable from 01.04.12 or 01.04.2013.AND I WANTED KNOW THAT MY POST OFFICE A/C MONTHLY INCOME SCHEME IS APPLICABLE UNDER U/S 80TTA AND POST OFFICE GIVE INTEREST ON RD IS APPLICABLE
    THANKS & REGARDS
    ARIF KHAN

  4. ARIF KHAN says:

    I WANT A CLARIFICATION ON 80 TTA FOR F.Y 2012-13.
    MY BANK S.B.I. CONVERTS THE INTEREST OF MY SAVINGS ACCOUNT IN TO F.D. INTEREST THROUGH M.O.D. BALANCE. I WANT TO KNOW WHETHER THE INTEREST IS CONSIDERED AS SAVINGS INTEREST OR NOT.(?)

  5. Aravind says:

    my sources of income is only Savings Bank Interest.i earned the savings bank interest in previous year Rs.10,000/- how much amount that i can be claimed under section 80 TTA of the income tax act 1961

  6. sunny says:

    Whether interest received on rd is taxable or not

  7. S. Patra says:

    I WANT A CLARIFICATION ON 80 TTA FOR F.Y 2012-13.
    MY BANK S.B.I. CONVERTS THE INTEREST OF MY SAVINGS ACCOUNT IN TO F.D. INTEREST THROUGH M.O.D. BALANCE. I WANT TO KNOW WHETHER THE INTEREST IS CONSIDERED AS SAVINGS INTEREST OR NOT.(?)
    EXPECTING A QUICK REPLY …

  8. Siva says:

    I and my wife have a joint savings account.My salary is getting deposited in that account.My home loan EMI is deducted from the joint account and my wife transfers her share from her own account to this account every month. There is an interest of Rs 10,000 that is accmulated.as per 80 TTA deduction, interest cannot be considered as deduction for body of individuals.Does this joint account form a body of individuals? IF not, can I, as a primary account holder claim entire deduction under 80TTA for this joint account on the interest of Rs10,000 earned?

  9. gopanna n g says:

    If the interest on savings bank a/c held as joint account and if the interest earned is more than Rs.10000/- , what is the treatment? In whose ITR a/c the interest of sb a/c to be declared?

  10. lokesh says:

    is section 80l applicable for ay-2011-12

  11. SACHIN NALAWADE says:

    My client has earned salaried income of Rs.4.25lacks and other income has been received on Saving Bank A/c interest of Rs. 10000/- so what gross total income eligible for Tax Calculation.

  12. sharad kumar says:

    my salary income is 805000 and saving a/c intrestis 5013 and FD Intres is 11410 will I get rebare on saving a/cs interst

  13. Prashant says:

    if the Saving Bank intrest is less than Rs.10000.00 please clarify whether it will be deducted from the toal income as per 80TTA

  14. S. 80TTA applicable from FY Starting 01.04.2012 and Assessment year starting from 01.04.2013

  15. PC Agarwal says:

    Sir,

    I have gone through the provisions of Sec. 80-TTA. Somewhere it is stated that it will take effect from 01st April, 2012 and on the other place it is stated as Ist April, 2013, and in the both the places it is stated that it will be applicable for AY 2013-14. In case it takes effect from 01st Apr. 2012 then no doubt it will be applicable to AY 2013-14, but if it is effective from 01st Apr 2013, how can it be applicable to AY 2013-14, as this will be the F.Y 2013-14 and not the AY 2013-14. Kindly clarify.
    With regards.

  16. ramesh chand says:

    I have received saving intt Rs 14000. Is Under section 80 TTA Rs 4000 will be added in income ?

  17. Sheelesh G Vaishnav says:

    I WANT A CLARIFICATION ON 80 TTA FOR F.Y 2012-13. MY BANK S.B.I CONVERTS THE INTEREST OF MY SAVINGS ACCOUNT IN TO F. D INTEREST THRO’ MOD BALANCE. IF THIS INTEREST AMOUNT IS WITHIN Rs. 10000 , IS IT LIABLE TO BE TAXED? I WANT TO KNOW WHETHER IT IS CONSIDERED SAVINGS INTEREST OR NOT.

  18. p.k.ghosg says:

    I have tow SBI Account. I have received 18000 as interest. kinly inform whether total amount will be taken as income for income tax for Assessment year 13-14 or income will be considered after deduction of Rs.10000

  19. puneet says:

    my father income is from pension plus sb/ac interest plus fd interest
    is we deduct 10k from the interest income???
    is it for the year 12-13 or for 13-14 ???
    admin pls reply me asap at 09211711311

  20. SC BANAWAL says:

    Sir, Please do clear the deduction u/s80TTA applicable from 01.04.12 or 01.04.2013?

  21. Gop says:

    To sri ajay sharma

    The exemption is applicable fro AY 2013-14 which corresponds to the financial year 2012-2013, that is the current financial year

  22. ajay sharma says:

    AS per your lines. The section is applicable with effect from April 01, 2013 and will apply from AY 2013-14 and onwards.

  23. ajay sharma says:

    Sir, Please be clear the deduction u/s80TTA applicable from 01.04.12 or 01.04.2013.

  24. Asis Ray says:

    1.If I have more than one savings bank account, should i clubbed the whole interest amount taking together for the purpose of claiming relief under section 80 TTA.
    2. whether this is to be shown under the head “income from other sources ” and deduct Rs. 10000/- from there or the same should be deducted from the gross total income as was done earlier u/s 80L ?

  25. Mayank Chopra says:

    ITR of salaried class who have there income not exceeding 5 lac can still claim this deduction. The provision states that if in case the salaried class have more than 10,000 interest income then such person has to his employer of the same. 

    i.e. let say salary is 5 lac but interest income is 25,000 then the employee has to give details of his interest income to his employer for tax purposes. Further the employee can claim deduction under the proposed new law.

    Pls Correct me if i am wrong.

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