Deduction in respect of interest on deposits in savings account (Section 80TTA):

Section 80TTA has been introduced from this Financial Year [2012-13] and it allows to an Individual or HUF from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account a deduction amounting to :

(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.

If such savings account is maintained in a

(a)  banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);

(b)  co-operative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank); or

(c)  Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),

For this section, “time deposits” means the deposits repayable on expiry of fixed periods.

Please Note Deduction under this section available for all the years starting from Financial Year 2012-13 including the Financial Year 2015-16 and 2016-17.


Extract of Section 80TTA of Income Tax Act,1961

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 (10 of 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 Office77 as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 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.]

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One response to “Section 80TTA Deduction – Interest on deposits in savings account”

  1. Dr Ramesh Chandra Rout says:

    Sir,
    It is reflected in my 26As for Asst. Yr. 1016 – 17 that Income Tax @2% has been deducted u/s 194DA from maturity amount of my ICICI Pru Life policy(one time premium of Rs 1 lakh paid in 2011). The total IT deducted is Rs 2667/- on total amount paid Rs 133309/-. Kindly suggest me how to avoid double taxation as while filing I T return, I have to pay tax on the whole amount of Rs 133309/-which includes Premium amount of 1 lakh for which I.Tax was already paid in 2011.
    with regards,
    Dr Ramesh Chandra Rout

  2. rugram says:

    Thanks for making the correction.

  3. rugram says:

    The very first article entitled “Deduction for interest on deposits in savings accounts up to 10K Rs.” (March 17, 2012, written after presentation of the Union Budget 2012) under ‘Related Posts’ above, mentions that the then proposed exemption U/s 80TTA would be available to all individual and HUF assessees. However, the current write-up says that the exemption is available to ’employees’. The writer of the current article should perhaps clarify why the exemption is now restricted only to employees.

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