Any interest income earned by an individual or a Hindu Undivided Family on savings accounts held with banks or co-operative society or post office is allowed as a deduction under section 80TTA of the Income Tax Act. The provisions relating to the same are explained in the current article.
Provisions of section 80TTA –
The following can be concluded from the bare reading of provisions of section 80TTA –
1. A banking company – Covers banks to which the Banking Regulation Act applies and also includes banks which are referred to in Section 51.
2. A co-operative society – Covers co-operative society which is engaged in carrying on the banking business. It includes a co-operative land mortgage bank or a co-operative land development bank.
3. A post office – Covers post office defined under section 2 (k) of the Indian Post Office Act.
Tabulating the allowable and non-allowable deduction under section 80TTA –
|Allowable deduction under section 80TTA||Non-allowable deduction under section 80TTA|
|Interest income earned from savings account with a bank.||Interest income earned from the fixed deposits|
|Interest income earned from savings account with a specified co-operative society.||Interest income earned from the recurring deposits|
|Interest income earned from savings account with a post office.||Interest income earned from any type of time deposits.|
Maximum amount of deduction available under section 80TTA –
The maximum amount of deduction available under section 80TTA is lower of the following –
In simple terms, if the eligible interest income is less than INR 10,000, then, the entire interest income would be allowed as deduction. However, in case the interest income is more than INR 10,000, then, only INR 10,000 would be allowed as a deduction under section 80TTA.
Frequently Asked Questions (FAQ) –
1. What is section 80tta in income tax?
Section 80tta allows a deduction to an individual or a Hindu Undivided Family in respect of interest income earned on savings account held with the banks or co-operative society or a post office.
2. Is Section 80tta applicable to FD interest?
Deduction under section 80tta is not applicable to FD (i.e. fixed deposit) interest. Deduction under section 80tta is available only in respect of interest income earned on a savings account.
3. Who is eligible for 80tta?
Only the individual and a Hindu Undivided Family, not covered under section 80TTB (i.e. senior citizens), are eligible for claiming deducting under section 80tta.