Article analyses Section 80TTA – Deduction in respect of interest on deposits in savings account for Individuals (other than Senior citizens) & HUF & Section 80TTB – Deduction in respect of interest on deposits in savings account for Senior citizens. It also contains Extract of Section 80TTA and  Section 80TTB of Income TAx Act, 1961.

Section 80TTA – Deduction in respect of interest on deposits in savings account for Individuals (other than Senior citizens) & HUF

Section 80TTA provides a deduction of Rs 10,000 on interest income. This deduction is available to Resident Individual or HUF (other than those assessee who has covered in Section 80TTB).

This deduction is allowed on interest earned

  • From a savings account with a bank
  • From a savings account with a co-operative society carrying on the business of banking
  • From a savings account with a post office

Maximum Deduction – The maximum deduction is limited to Rs 10,000. If your interest income is less than Rs 10,000, the entire interest income will be your deduction. If your interest income is more than Rs 10,000, your deduction shall be limited to Rs 10,000. (You have to consider your total interest income from all banks where you have accounts).

How to claim the deduction – First add your total interest income under the head ‘income from other sources’ in your Return and then consider the deduction under section 80TTA.

Tax Deduction

Section 80TTB – Deduction in respect of interest on deposits in savings account for Senior citizens

This section will provide deduction in respect of interest on deposits. This section is available to Resident individual who is of the age of sixty years or more at any time during the relevant previous year

This deduction is allowed on interest earned

  • From a savings account with a bank
  • From a savings account with a co-operative society carrying on the business of banking
  • From a savings account with a post office

Maximum Deduction – The maximum deduction is limited to Rs 50,000. If your interest income is less than Rs 50,000, the entire interest income will be your deduction. If your interest income is more than Rs 50,000, your deduction shall be limited to Rs 50,000. (You have to consider your total interest income from all banks where you have accounts).

How to claim the deduction – First add your total interest income under the head ‘income from other sources’ in your Return and then consider the deduction under section 80TTB.

Extract of Section – 80TTA – Deduction in respect of interest on deposits in savings account

80TTA. (1) Where the gross total income of an assessee (other than the assessee referred to in section 80TTB), 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 Office 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.

Extract of Section – 80TTB of Income-tax Act, 1961- Deduction in respect of interest on deposits in case of senior citizens.

80TTB. (1) Where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits 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 Office 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—

  (i) in a case where the amount of such income does not exceed in the aggregate fifty thousand rupees, the whole of such amount; and

 (ii) in any other case, fifty thousand rupees.

(2) Where the income referred to in sub-section (1) is derived from any deposit 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, “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

****

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

More Under Income Tax

5 Comments

  1. Sankar Sundaram says:

    Deduction for Interest on deposits in savings account – Extract of Sec 80TTB is about any income by way of interest whereas the explanation restricts any interest income to savings bank interest.
    Please clarify.

    1. salman says:

      YES. 80TTB is specific to interest accruing on savings bank account. No other interest like int from fixed deposit, debntures etc., will be entertained under this.

  2. 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

  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.

Leave a Comment

Your email address will not be published. Required fields are marked *