Section 80 TTA - Claiming Deductions On Interest

Roshni Bhagtani

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Section 80 TTA - Claiming Deductions On Interest

This article is about claiming deduction under section 80 TTA. This small deduction under section 80 TTA is forgotten to claim by many. Let’s discuss this section in detail

Did you know that any interest you collect on your savings account is taxable? One of the most common mistakes is to forget to report the interest on savings accounts under income from other sources. And if you don't disclose, be prepared to receive an income tax notice, the penalties you pay are substantially higher than the savings account interest tax.

Who can claim under section 80 TTA:

Deduction under section 80 TTA is available only to an individual and the HUF (Hindu Undivided Family).

The government wants to encourage individuals to make small savings and hence the deduction.

Types of interest income covered under section 80 TTA:

● Interest from the savings account with the bank

● Interest from the savings account with the post office

● Interest from the co-operative society carrying on the banking services.

Maximum deduction allowed under section 80 TTA:

The highest exemption available under Section 80 TTA is Rs. 10,000 annually.

If your interest income is less than 10,000 your whole amount will be exempted.

If your annual interest amount on a savings account is more than the deduction allowed i.e, Rs.10,000. Then your exemption amount will be limited to Rs. 10,000.

You can avail of this exemption amount even if you have multiple bank accounts with the condition that 10,000 is the upper limit for all bank accounts.

For example, Mr. A has three bank accounts with different banks, and his total interest income from all three banks is Rs. 9,000 then his whole amount will be exempted under section 80 TTA as the total limit of exemption whether is in the case single bank account or multiple banks account is Rs 10,000.

Interest income that is not allowed under section 80 TTA:

● Interest on fixed deposits

● Interest on recurring deposits

● Interest on any other type of deposits

Let’s understand with the example on how to claim your deduction under section 80TTA:

Mr. A annual salary income is Rs. 7,00,000, he has earned interest on fixed deposits which will be charged under section 80 C up to 10,000. Mr. A has an interest in savings which amounts to 7,000.

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A small exception

Senior persons are not eligible for 80 TTA. The reason for this is that the government established Section 80 TTB in April 2018 to give additional benefits to elderly persons in the form of a deduction.

With effect from April 2018, a person who is a resident of India and is above the age of 60 will be deemed a senior citizen under Indian income tax rules, and section 80 TTA will no longer apply; instead, they will get a benefit under section 80 TTB.

Let’s look at the difference between 80 TTA & 80 TTB to make it more clear:

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All of these deductions under the Income Tax Act seem to be quite complicated?

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