Income Tax Section 80TTA| Under the Indian Income Tax Act, various deductions are provided to the
Indian taxpayers to reduce their income tax liability and thereby reduce their tax expenses. These
deductions can be based on salary, investment, or payment.
U/s 80TTA of the Income Tax Act,
tax exemption is eligible to taxpayers on interest earned in a savings account.
The savings account in question may be held at a bank, cooperative, or post
office.
Section 80TTA was included in the
Finance Act in 2013 and has since exempted many taxpayers.
Let us examine the terms and
conditions involved in availing the benefits of Section 80TTA.
This exemption is provided U/s
80TTA- Terms and Conditions
1) The conditions applicable for
tax deductions under Section 80TTA are listed below:
2) A maximum of Rs.10,000 per
annum can be deducted from the interest of savings accounts
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Deductions can be claimed by
individuals and Hindu Unified Families (HUFs).
3) If an entity has more than one
savings account with multiple banks, the combined interest income of all the
accounts must be below INR 10,000 to avail of the benefit of deductions
4) In the above case, if the
cumulative interest income exceeds the limit of INR 10,000, tax exemption can
be claimed for INR 10,000 and the remaining amount will be taxable.
Eligibility to claim deductions under 80TTA
Under the Income Tax Act, Section 80TTA deductions can be
claimed against:
(a) Taxpayers belonging to the category
of natural persons or Hindu Undivided Family (HUF).
b) Indian residents
c) Non-resident Indians (NRIs)
holding NRO savings accounts
(d) An organization holding savings accounts with institutions such as banks, post offices, or cooperative societies
Claiming 80TTA Tax Deductions
Under Section 80TTA, tax deductions
of up to INR 10,000 can be claimed for an eligible assessor above the limit of
INR 1.5 Lac of Section 80C. Be sure to include the interest on savings accounts
under the Income from other sources section when filing income taxes.
Exemption under Section 80TTA
1) If the total income of the
company is less than the minimum taxable income, a person cannot claim tax
exemption under section 80TTA
2) Senior citizens cannot avail of
tax deductions under Section 80TTA
3) Tax exemption 80TTA does not
apply to:
• Long Term Deposits
• Fixed deposits
• Recurring Deposits
• Deposits from NBFC (non-banking
finance companies).
• NRA holders of NRE accounts
cannot claim tax deductions under Section 80TTA as NRE accounts are tax-exempt.
Conclusion
Many savings account holders are
unaware of the taxes on savings account interest. Section 80TTA of the Income
Tax Act 1961 covers the income tax exemption granted on interest earned on
savings accounts, with a maximum exemption of INR 10,000 per annum.
This exemption applies to Hindu undivided individuals or families (HUF).
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