Section 80TTA – All about Claiming Deduction on Interest

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.

Which Type of Interest Income are Allowed as Deduction Under Section 80TTA

• 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

Interest Income Not Allowed as Deduction Under Section 80TTA

Time deposits mean deposits repayable on expiry of fixed periods. It shall not be allowed for –

• Interest from fixed deposits
• Interest from recurring deposits
• Any other time deposits

Maximum Deduction Allowed Under Section 80TTA

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 Deduction Under Section 80TTA

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.

For Example:

If Mr. A earns salary income of Rs. 2,00,000 and Interest on savings account with a bank is Rs. 5,000 and on fixed deposits is Rs. 15,000 in a financial year. Also, eligible amount for deduction of Rs. 10,000 under section 80C. Then, taxable income will be computed as below:-

Frequently Asked Questions

Am Obligated to disclose Interest earned on balance maintained in my Savings Bank account?

Yes, Income Tax Act,1961, requires that every person for whom filing of return is applicable, is expected to report all the incomes earned by that person during the period for which he is filing the return and pay the applicable taxes.

What will be the consequences of not reporting the Interest Income earned on balance maintained in a savings bank account.

If any person fails to report the Income earned by him during a year, either intentionally or otherwise, when return of such Individual / HUF is picked for scrutiny then they shall be liable to penal provisions for such non compliance and be demanded to pay the tax due along with interest.

Read about 80TTB here

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