• Jan
  • 26
  • 2015

Section 80TTA Deduction- Interest on Bank savings deposit

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CA Sandeep Kanoi

Section 80TTA is  introduced with effect from April 01, 2013 and will apply from AY 2013-14 and onwards. Section is 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 provided 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.

80TTA

Analysis of Section 80TTA

Who can claim deduction u/s 80TTA?

Deduction u/s 80TTA is applicable to individual taxpayers and HUF only. This benefit is not available to a firm, an Association of Persons, a Body of Individuals, LLP or Company Assessee.

Eligible savings account for claiming deduction

Saving accounts with any of following entities will qualify:

  •  Bank or banking company;
  •  Co-operative society engaged in carrying on the banking business and as specified.
  •  Post office savings account.

Section 80TTA deduction not available on FD Interest

This deduction is NOT applicable to the interest you received on your FDs/time deposit or term deposit. Term deposit means a deposit received by the bank for a fixed period and can be withdrawn only after the expiry of the predefined fixed period.

Maximum Deduction

  • The deduction allowed is  interest received on eligible saving accounts or Rs. 10,000 whichever is lower.
  • If interest earned is more than 10,000 then balance amount will be taxable as before i.e considered as Income from Sources and taxed as per your slab rate.
  • The deduction is in addition to deduction of Rs. 1.50 Lakh of section 80C of the Income Tax Act-1961.

Applicable from A.Y. 2013-14 Onwards

The section is applicable from April 01, 2012 and will apply from AY 2013-14 and onwards.

TDS Provisions not applicable on Saving Bank Interest

The interest earned on savings account is exempted from TDS under Section 194A of Income Tax Act i.e No TDS is deducted on interest from saving account.

Post office savings bank interest exemption under section 10(15)(i)
Post office savings bank interest is exempt up to Rs. 3500 (in an individual account) and Rs. 7000 (in a joint account) under section 10(15)(i) by virtue of Notification No. 32/2011, dated June 3rd 2011 read with Notification No. GSR 607, dated June 9, 1989. The cumulative impact of section 10(15)(i) and 80TTA as follows:
Up to the Asessment year 2011-12 Rs. For the Assessment year 2012-13 Rs. From the Assessment Year 2013-14 Rs.
Interest on Post Office saving Bank (exemption under section 10(15)(i) Full Exemption, nothing is taxable Exemption up to Rs. 3500 in a single account and Rs. 7000 in a joint account Exemption up to Rs. 3500 in a single account and Rs. 7000 in a joint account
Interest on savings account with a bank, co-operative bank and Post office (deduction under section 80TTA) No deduction No deduction Deduction up to Rs. 10000

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.

Extract of Section 80TTA

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.’.

(Updated on 26.01.2015)


53 Responses to “Section 80TTA Deduction- Interest on Bank savings deposit”

  1. Deepak says:

    Hai

    My gross income is 2 lakh 40 thousand rupees per year.

    I HAVE 3 SB Accounts (2 sole accounts, 1 either or survivor with mother)

    MY MOTHER IS A HOUSEWIFE.

    Recently through property sharing my mother received 3 LAKHS CHEQUE.

    My mother deposited in HER EITHER OR SURVIVOR ACCOUNT.

    WILL I BE TAXABLE???. BECAUSE THE SB ACCOUNT INTEREST ALSO WOULD CROSS 10000 and my GROSS INCOME ALSO WOULD ACROSS 250000 (TAX SLAB)

    KINDLY CLARIFY…Expecting a reply at the earliest

    Thank You

  2. Kanaga says:

    Hai Everyone

    I am a housewife (Home Maker).therefore i have no income

    Recently my father passed away and i received my share of property (ie) around 5 lakh rupees.

    I want to open an SB ACCOUNT and deposit this money there, so that i can give it to my son when he needs some money.

    But i am afraid whether i will be posted income tax , since income from SB Interest will cross 10000 rs.

    Kindly clarify….whether i would be taxed.

    I WANT TO SAFEGUARD THIS MONEY WITHOUT MY HUSBAND’S KNOWLEDGE.

    Kindly help.

  3. Raghav says:

    Hai everyone.

    My gross income is rs 250000 (2 lakh 50 thousand). i earn rs 17000 as interest from SB accounts from multiple banks.
    THIS IS MY TOTAL INCOME FOR AN YEAR.

    SHOULD I PAY TAX. Kindly tell….

    How can i exempt myself from paying Income tax for the above mentioned income

  4. ABHISHEK says:

    I HAVE NRO ACCOUNT (SAVING), WHWRHER INTEREST EARNED IS LIABLE FOR DEDUCTION U/S 80TTA.

  5. Sanjay Pratap says:

    I have linked saving account plus in may SBI salary account and got interest of 75000 in FY 14-15. the tax deducted at source from this inerest is 7500. my question is instead of opening saving account plus and linking it to my salry account can i tranfer my money to my wife accout and link her account with saving account plus. by doing so can i avoid tax?

    Regards Sanjay

  6. pramod upadhyay says:

    i have an recurring deposit account in BANK. please inform me whether 10% TDS will be deducted from the interest on it.

  7. rajagopalan.a says:

    if a person receives rs. 12000 as s.b interest, he has to show this as income in return and show rs. 10000 as deduction under sec. TTA. am i correct

  8. C Prakash says:

    Sir my Wife is holding FD account in Nationalised bank for 2 years. She is unemployed. Can I claim rebate for IT purpose. If so, please state the authority and rule.

  9. Charlin Shah says:

    i have an recurring deposit account in post office. please inform me whether 10% TDS will be deducted from the interest on it.

  10. Virender Kumar says:

    If I have multiple savings account in different Banks say 1. Canara bank , 2 HDFC bank , 3. Yes Bank etc …

    Can I claim rebate under Section 80TTA of Rs10,000 for each bank or Max rebate is Rs10,000 only irrespective number of different accounts or Banks .

  11. tejas says:

    whether 80TTA Deduction is available for MIS Interest received

  12. D.Paul Raju says:

    sir I am paying Rs.15000/- under Medical Insurance LIC.I am showing it under 80D. But this year onwards our(AP) Govt deducting Health insurance @90/- per month. Where I have to show it?

  13. Rajkishore singh says:

    sir

    I have Rs 15000 as interest from saving account. TDS has also been deducted from
    interest earned from saving account.
    Whether
    1. I have to show Rs 15000 as income from other source
    2. or claim entire Rs 10000 for deduction under 80TTA.

    I should follow Sl. no.1 and 2 both or only Sl. no.2
    Kindlly inform me at my mail.

  14. pratakta kuralkar says:

    My SBI saving account partial amount get converted to MOD the bank has deducted TDS on this interest. Can’t I Apply Sec 80TTA here

  15. R. N.Thakur says:

    My question is 4 Isoft Solutions Pvt. Ltd company have current A/c in that Current A/c if Director wants to put lum sum amount for Fixed deposit , on fixed deposit can received Interest from the bank & that will be also taxable income for the company & what will be % of tax.

  16. Mr habib says:

    sir yesterday when I visited the bank to deposit rs . 7 lakhs in savings account, I was told by the consulting officer the TDS will be deducted on the amount, for 1,00,000 deposit Rs 100 will deducted, so on the whole amount of 7 lakhs they will be a deduction of Rs 700 for the 31st march 2015.

    1) I want to get the clarification even after submitting the form 15g why there is a tax deduction???
    pls provide with the detailed information on what limit there is no TDS.

    thanks

  17. Francis Chacko says:

    Suppose I earned savings Bank Interest Of Rs.15000 from a commercial bank and Rs. 7000 from savings bank with Post office. How much deduction could I claim?

    U/s 10 (15) (i) Rs.3500
    U/s 80TTA Rs.10000

    Suppose the saving Bank account with Post Office is a joint account, whether I could claim exemption of Rs.7000 or Rs.3500 by me and Rs.3500 by joint holder

  18. Sandeep says:

    Mr. Sandeep kanoi Sir Please clear the concept regarding tds applicability.

    as u said that tds not applicable on saving bank interest but still i have seen lots of bank statements where bank has deducted tds.

    So, Pl clarify the above point.

  19. rugram says:

    Mr. Vijay Kumar and Mr. Nikhil
    In my view, interest earned/accrued on a recurring deposit account with a bank is taxable and is not eligible for deduction u/s 88 TTA, as already mentioned by me in my response dated 26.1.2015, item 7. This is because an RD a/c is opened for a fixed period of months/years and so should come under the purview of a ‘term deposit’ as defined in this section, and so is not a savings bank deposit.

  20. vijaykumar says:

    whether interest is eligible on Recurring Deposits in Bank

  21. CA. Subhash Chandra Podder says:

    Paro Bhalo Kairra Paro.

  22. nikhil says:

    Is this section 80TTA is applicable for the interest received from recurring deposit?? If not thn it is taxable or we will get deduction in some other section…?

  23. Dinesh Z says:

    Sir. Interest on Auto sweep S.B. A/C . SEC 80TTA APPLIED.? CAN GETRs.10000/- Under 80TATA.? Pl advice

  24. rugram says:

    I am not a CA but from reading Mr. Kanoi’s article along with the extract of Sec 80 TTA(1) quoted by him, my opinion on some of the queries raised on Sec. 80TTA is as under. However, it is better to recheck with your Tax Consultant on this subject. Thanks.
    I am sorry I could not respond earlier as I read this article that appeared today 26.1.2015.

    1. Mr. Mohd. Shahbaz
    The deduction under Sec. 80 TTA is applicable to eligible assessees from AY 2013-14 (i.e. FY 2012-13) onwards. Your income from savings bank account is Rs.12,000/- and so you have to include the entire interest of Rs. 12,000/- under ‘Income from Other Sources-Interest’ in the Income-Tax Return (ITR) but claim a deduction of Rs. 10,000/- under Sec. 80TTA, in the part ‘Deduction under Chapter VI-A’ against the column Sec. 80 TTA. In chapter VI A deductions, you would no doubt show deductions, if any, under Sec.80C etc., if applicable.

    2. Mr. Mukesh Singh
    As your earning from savings bank interest is Rs. 25,000/-, you have to include the entire amount (Rs. 25,000/-) as income from other sources, and also claim Rs. 10,000/- under Sec. 80TTA – please see the reply no. 1 above. For calculation of tax on your total income, you need to consult someone else as there could be several deductions available to you. I am not competent to guide you.
    However, please note that the deduction u/s 80 C has been raised to Rs. 1.5 lacs (for FY 2014-15), and so you can, if you so wish, invest an additional amount of Rs. 50,000/- (over Rs. 1,00,000/-) in eligible avenues to avail of the additional deduction.

    3. Mr. Thomas
    If Kerala State Treasury is eligible to be called ‘a bank’, then the interest you earn from it would be eligible for deduction u/s 80 TTA subject to the limit of Rs. 10,000/- as mentioned in this section. Kindly check the status with the Treasury. You can also check with them if interest they pay on your investment with them is eligible for tax deduction or for tax exemption under other sections of the I-T Act.

    3. Mr. Sohan Bhist
    All interest from fixed deposits and savings bank accounts, besides any other taxable interest, has to be included in your ITR under ‘Income from Other Sources’.
    Section 80 TTA only applies to interest earned from savings bank accounts as defined in that section. Hence interest on fixed deposits is not eligible for exemption u/s 80 TTA. You can claim deduction u/s 80 TTA for the interest earned on savings bank accounts up to the actual s/b interest earned or Rs. 10,000/-, whichever is lower.

    4. Mr. Jitesh Sapte
    Yes, you could have claimed a deduction of Rs 1,500/- earned on savings bank interest during FY 2012-13 u/s 80 TTA and to that extent reduced the income-tax liability. Kindly bring this to the notice of your tax consultant. Please also check that for FY 2013-14, your consultant had claimed the deduction u/s 80 TTA, in respect of interest on s/b accounts during that year.

    5. Mr. Arif Khan
    Sec 80 TTA is not applicable to deposits other than savings bank deposits. Post Office RD and MIS interest, in my view, is not eligible under this section since these deposits are repayable after a fixed period. Please refer to the Explanation to Sec. 80 TTA (2) quoted in Mr. Kanoi’s article above.
    As regards automatic transfer of interest earned on savings bank deposits to fixed deposits, as long as the s/b interest is first credited to your s/b account and then separately transferred to fixed deposit (i.e, there has to be a credit of s/b interest and a debit for transfer of interest to fixed deposit), the amount earned as s/b interest would be eligible under Sec. 80 TTA.

    6. Mr. Aravind
    If your only source of income is interest on s/b a/c, then you can claim a deduction u/s 80 TTA mentioned in the article up to a maximum of Rs. 10,000/- only. The balance is taxable. However, please check if you are liable to pay any income-tax on the balance, since the basic exemption limit for tax for FY 2014-15 is Rs 2,50,000/- for a person other than a senior citizen. I presume you don’t have any income under any other category.

    7. Mr. Sunny
    Yes, interest earned on recurring deposit with a bank is taxable as an RD a/c is classified as a tern deposit and not as a savings bank deposit.

    8. Mr. S.Patra and Mr. S G Vaishnav
    Please refer to the reply to Mr. Arif Khan above.

    9. Mr. Siva and Mr. Gopanna N G
    An account held by an individual with another individual (for convenience) is not an account of a ‘body of individuals’, as far as my knowledge goes. So the interest you earn on your s/b account (joint a/c with your wife) is eligible u/s 80 TTA. I presume that except for this transfer of exact amount of loan EMI share by Mrs. Siva to your bank a/c, any other income of Mrs. Siva is shown in her own bank account and not in Mr. Siva’s bank account.
    Mr. Gopanna, if your savings bank account is used only to credit your earnings and not of any other individual, then you have to declare the s/b account interest in your ITR. In case your joint account holder (an individual) has a separate source of income, please ensure that the joint holder credits his/her income to his/her separate account and not in yours.

    10. Mr. P K Ghosh
    Yes, the total of interest earned on all savings bank accounts can be aggregated and this total should be considered for Sec. 80 TTA. Please refer Sec. 80 TTA (1) (i) quoted in Mr. Kanoi’s article.

  25. Mohd Shahbaz says:

    My annual income from salary is Rs. 1450000 and i have also earned interest of Rs. 12000 from my saving account. I had already investment in LIC for Rs. 125000 can avail the rebate u/s 80-TTA for Rs. 10000 too.

  26. Mohd Shahbaz says:

    would like to know about sec 80TTA in detail with examples. suppose My annual income is Rs. 1450000 that is income from salary and i also earned interst of Rs. 12000 on my saving account. let i do saving under sec VIA is 100000. how much tax would i like to pay.

  27. mukesh singh says:

    i would like to know about sec 80TTA in detail with examples. suppose My annual income is Rs. 550000 that is income from salary and i also earned interst of Rs. 25000 on my saving account. let i do saving under sec VIA is 100000. how much tax would i like to pay.

  28. Thomas says:

    I have SB account with Kerala State Treasury dept. It offers 3.5% interest. How much interest income is non-taxable or can be availed as deduction?

  29. 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.

  30. 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/-.

  31. 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

  32. 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.(?)

  33. 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

  34. sunny says:

    Whether interest received on rd is taxable or not

  35. 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 …

  36. 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?

  37. 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?

  38. lokesh says:

    is section 80l applicable for ay-2011-12

  39. 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.

  40. 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

  41. 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

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

  43. 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.

  44. ramesh chand says:

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

  45. 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.

  46. 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

  47. 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

  48. SC BANAWAL says:

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

  49. 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

  50. 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.

  51. ajay sharma says:

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

  52. 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 ?

  53. 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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