Under the Indian Income Tax Act, several deductions are provided to the Indian taxpayer to reduce his tax liability and thus reduce his tax bill. These deductions can be through salary, investment or payment.
Under Section 80TTA of the Income Tax Act, tax exemption is provided to eligible taxpayers on interest earned in a savings account. The savings account in question may be held in a bank, a cooperative society or a post office.
Section 80TTA became part of the Finance Act in 2013 and has provided relief too many taxpayers since then.
Let us examine the terms and conditions for availing the benefits of Section 80TTA.
This exemption is made under Section 80TTA- Terms and Conditions
The terms and conditions regarding tax deduction under Section 80TTA are given below:
Up to INR 10,000 can be deducted in a year from interest earned in savings accounts
Deductions can be claimed by Hindu Non-Sharing Individuals and Families (HUF) .
If an entity has more than one savings account with multiple banks, the combined interest income from all the accounts must be below INR 10,000 to avail the deductions.
If the accrued interest income in the above case exceeds the limit of INR 10,000, tax exemption of INR 10,000 can be claimed and the remaining amount will be subject to tax.
To be eligible to claim deductions under 80TTA
According to the Income Tax Act, deductions under Section 80TTA can be claimed for:
Taxpayers belonging to the category of Hindu Undivided Individuals or Families (HUF) .
Indian inhabitants
Non-resident Indians (NRIs) holding NRO savings accounts
This entity holds savings accounts with institutions such as banks, post offices or co-operative societies
Claim of tax deductions 80TTA
Under Section 80TTA, tax deduction of up to INR 10,000 can be claimed for an eligible beneficiary exceeding the Section 80C limit of INR 1.5 Lac. Be sure to include interest from bank savings accounts in the Income from other sources section when filing your income tax return.
Exceptions under Section 80TTA
If the total gross income of an entity is below the slab of minimum taxable income, it cannot claim tax deduction under Section 80TTA
Senior citizens cannot avail tax deduction under Section 80TTA
The 80TTA tax exemption does not apply to the following:
Time deposits
Fixed deposits
Recurring deposits
NBFC (Non-Banking Financial Companies) deposits .
NRI holders of NRE account cannot claim tax deductions under Section 80TTA as NRE accounts are tax free.
Conclusion
Many savings account holders are unaware of the tax liability on interest earned on savings accounts. Section 80TTA of the Income Tax Act 1961 talks about the income tax exemption provided for interest earned on savings accounts, with a maximum deduction of INR 10,000 per annum.
Deduction applicable to Hindu Undivided Individuals or Families (HUF).
Feature of this Excel Utility:-
1) This Excel utility prepares and calculates your income tax as per the New Section 115 BAC (New and Old Tax Regime)
2) This Excel Utility has an option where you can choose your option as New or Old Tax Regime
3) This Excel Utility has a unique Salary Structure for Government and Non-Government Employee’s Salary Structure.
4) Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the F.Y.2000-01 to F.Y.2022-23 (Update Version)
5) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2022-23
6) Automated Income Tax Revised Form 16 Part B for the F.Y.2022-23
