Section 80TTA

What is section 80TTA?

Section 80tta provides a deduction of Rs.10000 on interest earned by an individual on his or her savings accounts income.

Who is eligible?

Deduction under section 80tta is allowed only to individual tax payers and Hindu undivided family (HUF). This benefit is not available to a firm, an association of person, a body of individuals, LLP or company etc.

Claiming deduction u/s 80tta

You can claim deduction on interest earned –

• From a savings bank account
• From a savings account with co-operative society involved in the banking business.
• Saving post office accounts.

Deduction not allowed u/s 80tta

You cannot claim deduction on interest earned on term deposits. Term deposits means deposits which are repayable on expiry of fixed period. Deduction is not allowed if –

• Interest earned on fixed deposit
• Interest earned on recurring deposit
• Other time deposits

Maximum deduction

The maximum deduction allowed u/s 80TTA is Rs.10000. If your interest income is less than Rs.10000, full amount of interest will be your deduction but if your interest income is more than Rs.10000, you are entitled for maximum deduction of Rs.10000 only not more than that.

How to claim deduction u/s 80tta?

To claim deduction u/s 80tta, you have to add all your savings interest income under the head “Income from other sources” while preparing your tax return. This deduction is shown under “section 80 deduction”.

Documents required for deduction under section 80tta

You can easily calculate your interest income & tax deduction with the help of savings bank account statement.

Deduction limit

• Income earned from savings account interest in non-taxable up to Rs.10000.
• Income earned from saving account interest is taxable if it is over & above Rs.10000. It comes under the head “Income from other sources”.
• However, maximum deduction allowed u/s 80tta is Rs.10000.

How banks compute interest on Savings account?

Many peoples become confused between the old and the new method used for calculating interest on savings account. Both the methods used by banks for calculating savings interest are given below –

• Old method – Previously, banks provide interest on the minimum balance available in the account of an individual in a particular month. For ex – If you maintained a balance of Rs.100000 during a month except one day when your balance fell down to Rs.10000, the bank will calculate interest on Rs.10000 only. Now, this process has been changed by the banks and new method is introduced.
• New method – Now days, banks calculating interest on the basis of money lying in the account of an individual at the end of the day. As a result, customers are getting better interest on their deposits.

How Finacbooks help?

Finacbooks is one of the leading firms in India having more than 10 years of experience in providing hassle free accounting & legal services. As you know, there are several provisions under income tax act and section 80tta is only one of them. Before making your tax returns, you must have proper knowledge about the tax reliefs to claim the tax benefits and save the maximum money on your taxes. Help from professional experts is very necessary to claim maximum benefits while preparing tax returns. We are having a team of experts who not only helps you in filing the taxes properly but also file the taxes for you. You can contact our accounting experts who will file your taxes online accurately while giving you maximum tax benefits.