Section 80TTA Deduction : Interest on Saving A/c [AY 2019-20]

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Saving Money

Introduction

80TTA is an income tax deductions provided to Individuals and HUF for interest on savings account up to Rs.10,000/- only. Non Residents are also eligible for this deduction. [Available in AY 2019-20]

Saving accounts held in following institutes are covered for the deduction:

  1. Bank
  2. Co-operative Society
  3. Post Office
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Maximum Deduction

Lower of the following is deductible:

  1. Actual Saving interest, or
  2. 10,000/-

Therefore, the maximum deduction of interest on saving account is ten thousand rupee only. Any amount of interest in excess of ten thousand rupees shall be taxable.

 

How to Claim deduction

Step 1: Add interest income under the head “Income from Other Source”

Step 2: Put actual saving interest income under the box allotted for section 80TTA. However, while filling IT return in paper form (physical), don’t put interest income above Rs.10,000/- otherwise, they will mark your return as defective.

Step 3: Furnish TDS details, if available. Generally, TDS details are auto-populated in IT Return.

 

Relevant FAQ

Q: Can I get the deduction of saving Interest of account held by me on behalf of my Firm?

A: No, 80TTA deduction is available only to an individual earning interest income on his saving bank account only.

Q: Is interest on fixed deposit of 1 month available for deduction?

A: No, irrespective of the period of deposit, interest income on fixed (time) deposit is not available for deduction under section 80TTA.

Q: Can I get the deduction for Cheque book charges, ATM charges etc from Interest income?

A: No

Any expense incurred for earning income under the head other sources can be deducted. In your case, cheque book or ATM charges are not used for earning interest income.

 

Amendment in Budget, 2018

From the financial year 2018-19 [AY 2019-2020], a resident senior citizen can get the deduction of interest income from deposit up to Rs.50,000/- under a new section called as the section 80TTB.

In other words, from FY 2018-19 section 80TTA will not be available to the resident senior citizen.

 

Difference Between 80TTA and 80TTB

Difference Section 80TTA Section 80TTB
Assessee The deduction can be availed by:
1. Individual
2. HUF
3. Senior Citizen (Up to FY 2017-18 only)
The deduction can be availed by:
1. Resident Senior citizen
Specified Income Interest on savings account only  Interest on all kind of deposits
such as fixed deposit, RD, Saving account
Maximum Deduction Rs.10,000 Rs.50,000
Non-Resident
Senior Citizen
Can take this deduction Can’t take this deduction
Remarks  From FY 2018-19,
It is not available to a resident senior citizen.

 

TDS on Interest income ( under section 194A )

                      No TDS on Interest Income Up to
Rs. 10,000/- In a Bank Account

[From FY 2018-19, it has been increased to Rs.50,000/- for senior citizen only]

Rs. 10,000/- In a Co-operative account [Engaged in Banking business]

[From FY 2018-19, it has been increased to Rs.50,000/- for senior citizen only]

Rs. 10,000/- In a post office account

[From FY 2018-19, it has been increased to Rs.50,000/- for senior citizen only]

Rs. 5,000/- In Other accounts

However, you can avoid TDS deduction on interest income by furnishing Form 15G/15H.

 

 

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