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 FY 2019-20]
Saving accounts held in following institutes are covered for the deduction:
- Co-operative Society
- Post Office
Lower of the following is deductible:
- Actual Saving interest, or
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.
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?
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:
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
|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. 40,000/-*||In a Bank Account|
|Rs. 40,000/-*||In a Co-operative account [Engaged in Banking business]|
|Rs. 40,000/-*||In a post office account|
|Rs. 5,000/-||In Other accounts|
*From FY 2018-19, for a senior citizen, deduction has been increased to Rs.50,000/-.
However, you can avoid TDS deduction on interest income by furnishing Form 15G/15H.