Yes, the deduction under Section 80TTA is over and above the deduction limit of Rs. 1.5 lakhs under Section 80C.
Understanding Section 80TTA
Section 80TTA of the Income Tax Act, 1961, provides a deduction for interest earned on savings accounts with banks, cooperative societies, and post offices. This deduction is available to individuals and Hindu Undivided Families (HUFs).
Deduction Limit
The maximum deduction that can be claimed under Section 80TTA is Rs. 10,000. This limit applies to the aggregate interest earned from all savings accounts.
Relationship with Section 80C
Section 80C offers a deduction of up to Rs. 1.5 lakhs for various investments and expenses, including life insurance premiums, Public Provident Fund (PPF) contributions, and tuition fees. The deduction under Section 80TTA is separate and distinct from the deduction under Section 80C.
Benefits of Section 80TTA
- Reduces taxable income
- Encourages savings
- Complements the deduction under Section 80C
Eligibility
Individuals and HUFs are eligible to claim the deduction under Section 80TTA. Senior citizens (aged 60 or above) are not eligible for this deduction as they have a separate deduction under Section 80TTB.
How to Claim the Deduction
To claim the deduction under Section 80TTA, taxpayers must:
- Calculate the total interest earned on their savings accounts
- Ensure that the interest income does not exceed Rs. 10,000
- Include the interest income in their total income
- Claim the deduction under Section 80TTA in their income tax return
Section 80TTA provides a valuable tax deduction for interest earned on savings accounts. This deduction is over and above the deduction limit under Section 80C, offering taxpayers additional tax savings. By understanding the eligibility criteria and claiming the deduction correctly, taxpayers can reduce their tax liability and promote financial well-being.
80TTA and 80TTB Deduction | Tax on FD Interest in India | Tax on Interest from Saving Bank Account
FAQ
Can we claim both 80C and 80TTB?
Is 80TTA in addition to 80C?
What is the maximum deduction for 80TTA?
What is the limit of 80C deduction?
What is a section 80tta deduction?
Deduction under section 80TTA is over and above the INR 1.5 lakh limit of Section 80C. Under section 80TTA of the Indian Income Tax Act 1961, individuals and HUFs are eligible for a deduction on interest income received from certain sources. The deduction is available for interest earned up to a maximum amount of INR 10,000.
What is tax exemption under section 80tta?
In case, the total cumulative interest earning exceeds 10,000 from savings accounts, then tax exemption could be claimed for ₹10,000 only. The additional income in this respect will be subject to income tax. The tax deduction under Section 80TTA is over and above the deduction of ₹ 1.5 lakh, which is deducted under Section 80C
What is 80tta of Income Tax Act?
80TTA of the Income Tax Act allows taxpayers in India to enjoy deductions on bank deposit savings. Know more about this section in our guide. Did you know that the interest you earn on the money lying in your savings account is taxable? However, deduction is also available on this income under Section 80TTA of the Income Tax Act.
How to claim section 80tta deduction under 115bac?
First, add your total interest income under the head ‘ Income from Other Sources ’ in your return. Calculate your gross total income for the financial year from all the income heads and then show it as a deduction under Section 80TTA. Important: You cannot claim Section 80TTA deduction if you opt for the new tax regime under Section 115BAC.