CA Sandeep Kanoi

CA Sandeep KanoiSection 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 under section 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 under section 80TTA

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 Term deposit means a deposit received by the bank for a fixed period and can be withdrawn only after the expiry of the predefined fixed period.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 under section 80TTA

  • 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)

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Company: Taxguru / Sandeep Kanoi & Associates
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111 responses to “Section 80TTA Deduction- Interest on Bank savings deposit”

  1. SK Gupta says:

    The above rule specifies of exemption of Rs 3500/- on interest in savings a/c of PO and then Rs 10000 for interest earned in all saving accounts which also includes PO. Let us say we have accounts in various banks & PO with data as under:
    1. Interest earned in PO Savings a/c Rs 4500/-
    2. Interest on savings accounts in all other banks Rs 9000/- (Total interest received = Rs 13500/-
    Then whether Rs 10000/- exemption will be on Rs 13500/- or on Rs 10000/- (4500-3500 + 9000)

  2. Prem Kumar says:

    I have 20 no FDs in SBI .I got total interest is around 1.2 lacks.TDS is deducted. my salary is in 30% slot. when we submitting the ITR this FD income come in 30% slot.

  3. Sameer says:

    Sir, Is the interest on the compulsory deposit (CD) of Co-OP bank is to be mention in ITR-1 under Section 80TTA

  4. senior citizen says:

    In FY 2018-19 senior citizens will get Rs. 50000/- exemption from their total annual income. With this, the exemption of Rs. 10000/- for savings bank a/c interest u/s 80tta is absorbed. or say it is 40000/- plus 10000/- under 80tta. Is it so ?

  5. Akanksha Gupta says:

    Will interest gain by SBI plus term deposits come inder section TTA or not ? Since there is no time limit.

  6. Rahul Gupta says:

    If the total interest rate from savings account is 8000/- and interest on FD is 15000 then can I enter 10000/- as TTA to claim tax benefit. I believe if yes then in this case 2000/- will be deducted from FD interest rate also which is not right as per the law.

  7. Kalpana Das says:

    I m a house wife of a retired person having interest income of more than ₹10000 from bank fix deposited, annual income being less than 2•5Lakh.Am I liable for filing of I.T.return. ?

  8. JOY DEB DEB SHARMA says:

    Net taxable income Rs.2,74,000 after 80C& Standard deductionI.i.e.Tax willbeRS.29,779/-.Can I get Rs.2000/- as 80TTA.

    • jigar says:

      Yes you can claim it. Deduction is available upto 10,000Rs.
      Actual interest
      Or
      10,000Rs whichever is lower…. Should be taken as deduction

  9. nabin gorai says:

    sir i took a personal loan of rs 500000 but the whole amount is lying unutilised in the a/c itself. subsequently a total amount of Rs 15000 was credited to that a/c as interest against the lying sum that came from the personal loan. so my query is that, is the sum of 15000 that came from interest taxable or non-taxable?

  10. nabin gorai says:

    sir i took a personal loan of rs 50000 but the whole amount is lying unutilised in the a/c itself. subsequently a total amount of Rs 15000 was credited to that a/c as interest against the lying sum that came from the personal loan. so my query is that, is the sum of 15000 that came from interest taxable or non-taxable?

  11. HARESH says:

    please give me calcution for my 1-4-13 to 31 3 14 income is folllows
    1 interst on sb a/c /c 1,45000.00
    2 interst on fd s 15000.
    3 interst on post s/b a/c 2500
    4 share in AOP FIRM 192000
    PAID PPF 100000
    LIC 21000
    PLEASE GIVEE TAX RETURN
    MY AGE 63 YEAR AS TODAY

    HOPE YOU WILL GOOD ADVICE

  12. satya says:

    Sir,

    We are a organization, we have closed on Fixed deposit before maturity of the FD and we have received some amount excess than Actual FD. Now i want to know that, how can account the excess part(Interest on FD) and which type of Income it is?

    regards,
    satya

  13. Rasika Sinha says:

    I just came to know about this section 80 TTA, and have never availed benefit from it. I have already filed my ITR for this year wherein i showed my whole salary account’s interest value under income from other sources, hence my tax got increased. Is there any way that i can show 10000 under 80 TTA section to reduce my tax now ?
    Thanks in advance!

  14. Venkataraman V says:

    Hi Mukesh, this looks like a glitch or someone has done a mistake. 10000 on 80TTA is over and above 1.5 Lac under 80C.

  15. ravi nambiar says:

    Sir I have savings account in SBI. SBI auto sweep some amount and pay interest on it and has deducted TDS on it. May you please suggest me whether this interest will be treated as interest on savings account or FD as per Income Tax Rule. Whether I can deducted Rs 10000/- on the above interest as per savings interest rule.

    • VARSHA says:

      I THINK THIS SECTION IS NOT MUCH BENIFITIAL BECAUSE FIRST WE HAVE TO INCLUDES IN TOTAL INCOME SO ITS ALMOST SAME NOTHING WE SAVE AS A TAX

  16. Priya Joshi says:

    I have 3 Fixed Deposit accounts for which I have opened a Savings bank account. All the interest on these FDs is credited to the same Savings account. The amount shown in form 26AS is total amount I receive which includes interest from FD as well as interest from savings. How do I understand which amount is FD interest and which is savings interest ? Please guide me in this regard and let me know how to claim the amount under section 80TTA of the IT Act .

    • Venkataraman V says:

      Hi Priya, If you reach out to your bank and ask them for a Interest Paid Certificate they will give you complete split up of all the FDs and Savings Account Interest seperately.

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