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Budget 2021 update :It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
This article is about claiming deduction on interest under Section 8oTTA. But first, what is 80TTA?
Section 80TTA provides a deduction of Rs 10,000 on interest income. This deduction is available to an Individual and HUF.
This deduction is allowed on interest earned –
This deduction is NOT allowed on interest earned on time deposits. Time deposits mean deposits repayable on expiry of fixed periods. It shall not be allowed for –
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. The deduction is shown under section 80 Deductions under section 80TTA.
Read about 80TTB here