{"id":30809,"date":"2020-04-14T20:06:57","date_gmt":"2020-04-14T14:36:57","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=30809"},"modified":"2020-04-14T20:07:00","modified_gmt":"2020-04-14T14:37:00","slug":"deduction-on-savings-accounts-deposits-under-section-80-tta","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/deduction-on-savings-accounts-deposits-under-section-80-tta\/","title":{"rendered":"Deduction on Savings Accounts Deposits under Section 80 TTA of the Income Tax Act: A Complete Assessment"},"content":{"rendered":"<p class=\"has-drop-cap\">Section 80TTA of the Income Tax Act provides the privilege to claim deductions on savings accounts deposits that are held in a bank, post office, or co-operative society. The exemption amount sought should be less than Rs. 10,000. The interest received on the savings account is taxable. But the Government, in order to encourage its citizens to make small savings, offers tax benefits on a savings account as well. Tax deduction under Section 80TTA is available for individuals as well as <strong><a href=\"https:\/\/enterslice.com\/learning\/huf-way-save-income-tax\/\">Hindu Undivided Family<\/a><\/strong> (HUF), except for senior citizens. Savings Account Interest above Rs 10,000 is taxed under the heading &lsquo;Income from Other Sources&rsquo; in the slab rate. <strong>Section 80TTA of the Income Tax Act was introduced in the Finance Bill, 2013<\/strong> and became applicable from the Financial Year of 2012-13. It is relevant in the current financial year too. In this article, we take a detailed look at this tax exemption on the savings account as per <strong>Section 80TTA of the Income Tax<\/strong> Act, 1961.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the Salient Features of Section 80TTA of the Income Tax Act, 1961?<\/h2>\n\n\n\n<p>The salient features of Section 80TTA the Income Tax\nAct, 1961 are listed below:<\/p>\n\n\n\n<ul><li>The tax exemption on savings account\ndeposit interest is limited up to Rs, 10,000 per annum.<\/li><li>This tax deduction is available for the\nsavings account held by individuals and Hindu Undivided Family (HUF).<\/li><li>A taxpayer can have multiple savings\naccounts with different banks. But the collective interest received from all\nthose accounts together should be under Rs.10,000 to obtain a complete\nexemption.<\/li><li>If, in case the total cumulative\ninterest earning from savings account interest exceeds the amount of Rs. 10,000\nthe tax exemption that can be claimed is Rs. 10,000 only. The additional income\nreceived as interest will be subjected to income tax.<\/li><li>No Tax Deduction at Source (TDS) is\navailable for savings account held by individuals and HUFs.<\/li><li>If the Gross total income of a person is\nbelow the minimum taxable income level, then section 80TTA of the Income Tax\nAct will not be applied even though the interest income from the savings banks\naccount exceeds Rs. 10,000. For instance, if the income of a person for a\nfinancial year is Rs. 2, 00,000, the interest income is Rs. 50,000, still it\ndoes not taxable because the total income is beyond the scope is a tax\nliability, and hence the Section 80TTA does not apply here. In this type of\ncircumstances, the individual need not file any tax return.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Where to Open Savings Accounts to Get Benefit Under Section 80TTA of the\nIncome Tax Act?<\/h2>\n\n\n\n<p>The savings accounts that are covered under Section 80TTA of the Income\nTax Account are of the financial Institutions like:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"447\" height=\"357\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Untitled1.png\" alt=\"accounts that are covered under Section 80TTA\" class=\"wp-image-30812\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Untitled1.png 447w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Untitled1-300x240.png 300w\" sizes=\"(max-width: 447px) 100vw, 447px\"\/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Banks <\/h3>\n\n\n\n<p>The banking companies which\nare formed as per the Banking Regulation Act of 1949. All banking institutions,\nas well as banks that are referred to in Section 51 of the Banking Regulation\nAct, are included as banks for the purpose of Section 80TTA.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;Post Offices<\/h3>\n\n\n\n<p>Government Financial Institutes defined in Section 2 (k) of the Indian\nPost Office Act 1898 (6 of 1898)<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Co-operative Societies<\/h3>\n\n\n\n<p>These\nare associations of people who are independent in nature and are involved in\ncarrying out a business which is similar to banking. Co-operative societies are\nrun by a community having common social, cultural and economic goals identical\nto a Co-operative Land Development Bank. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How to claim deduction under Section 80TTA of the Income Tax Act?<\/h2>\n\n\n\n<p>First, add the total interest income under the heading &ldquo;Income from Other Sources&rdquo; in the <strong><a href=\"https:\/\/enterslice.com\/income-tax-return-filing\">Income Tax Returns<\/a><\/strong> form while filing the Income-tax returns. Write the amount of deduction in the respective column as prescribed under Section 80TTA. By following these simple steps, a person can avail deductions under Section 80TTA of the Income Tax Act, 1961.<br><\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/tax-saving-options\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Tax Saving Options Beyond Section 80C<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Maximum Amount of Deduction Provided in Section 80TTA of the Income Tax Act?<\/h2>\n\n\n\n<p>The maximum deduction amount is limited to Rs 10,000. In case\nyour savings account interest income is less than Rs 10,000, the entire\ninterest income will be deducted. And if your interest income is more than Rs\n10,000, the deduction amount will be limited at Rs. 10,000 all to be considered\ntogether. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the Exceptions under Section 80TTA of the Income Tax Act?<\/h2>\n\n\n\n<p>The deductions that are\npermitted under Section 80TTA of the Income Tax Act will not be allowed for the\ninterest earned on the amount of fixed deposits, and it is taxable according to\nthe standard slab rates as indicated in the Union Budget by the Government. The\ntax deducted at source or TDS applies only if the interest earned exceeds Rs.\n10,000 per annum. The deduction done for any income amount received through the\nfixed deposits is not permitted in the same way. <\/p>\n\n\n\n<p>The deduction prescribed\nunder section 80TTA cannot be claimed against any interest amount earned from\nthe recurring deposits. <\/p>\n\n\n\n<p>Individuals and HUF can\nclaim deductions under section 80TTA. However, firms, corporates, artificial\njuridical person, an association of persons, the body of individuals either\nforeign-based or domestic are not allowed a deduction under section 80TTA.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Difference Between Interest on Savings Account and Fixed\nDeposit?<\/h2>\n\n\n\n<p>Under a Fixed Deposit account, the depositor is\nexpected to deposit the amount with the bank for a fixed period. In contrast,\nin a savings account, the deposited amount can be withdrawal at any time from\nthe bank. As the amount deposited in a fixed deposit is for a fixed period, it\npays a higher rate of interest as compared to the interest given on savings\naccount.<\/p>\n\n\n\n<p>However no deduction is given on the interest earned\nfrom a fixed deposit account, and it is taxable as per the income tax slab\nrates. Furthermore, a TDS amount of 10 Percent is also deducted on the fixed\ndeposit interest amount, in case the interest earned is more than Rs. 10,000.<\/p>\n\n\n\n<p>Whereas, a deduction of Rs. 10,000 is provided for\ninterest on the savings account. Moreover, no deduction TDS deduction is made\non this amount. The income which is earned from interest, whether it be a\nsavings account or a fixed deposit account is disclosed under the head &ndash;income\nfrom other sources. <\/p>\n\n\n\n<p>Though a deduction is allowed up to the amount of\nRs. Ten thousand on the interest on savings account and not on fixed deposit\naccounts. Still, it is advisable to open fixed deposit accounts as it will provide\na higher rate of interest.<\/p>\n\n\n\n<p>PPF account is also suggested as a better investment\noption for someone interested in investing in tax-free fixed income-earning\ninvestments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Interest Changes in Banking<\/h3>\n\n\n\n<p>Prior, the Reserve Bank of India (<strong><a href=\"https:\/\/www.rbi.org.in\/\">RBI<\/a><\/strong>) had set the interest rate for savings account at 4% per annum. Additionally, the interest given by banks was based on the minimum balance in the quarter. In any case, presently the RBI permits banks to fix a higher rate of interests if they wish to and banks are offering interests as high as 6%. Banks now calculates the amount of interest-based on the daily balance and not on the minimum balance in the account. This means that the banks will give you a higher rate of interest. By checking your bank statement every month, you can keep a tab on this.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>Section 80TTA of the\nIncome Tax Act gives relief to the investors because they do not have to keep\ntrack of the small amounts of interest that get accrued in their savings deposit\naccounts and so they need not include those while computing taxable income.\nThis tax deduction is a relief for them to avoid any penalty for non-payment of\ntaxes on some small incomes. On the other hand, people who have lower to middle\nincome and who have to pay some marginal amount of tax will also get an\nadditional benefit of Rs.10,000 beyond the tax deduction of Rs.1.5 lakhs under\nSection 80C. This is an extra benefit provided to the taxpayers.<\/p>\n\n\n\n<div class=\"read\"><p><b>More on Tax:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/who-can-claim-deduction-under-section-80dd-of-the-income-tax\/\" target=\"_blank\" rel=\"noopener noreferrer\">Section 80DD of the Income Tax Act: Who is eligible to Claim this Deduction?<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Section 80TTA of the Income Tax Act provides the privilege to claim deductions on savings accounts deposits that are held in a bank, post office, or co-operative society. The exemption amount sought should be less than Rs. 10,000. The interest received on the savings account is taxable. But the Government, in order to encourage its [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":30813,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1473,2435],"tags":[2905,2904],"acf":{"service_id":"127"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Deduction on Savings Accounts Deposits under Section 80 TTA<\/title>\n<meta name=\"description\" content=\"Section 80TTA of the Income Tax Act was introduced in the Finance Bill, 2013 and became applicable from the Financial Year of 2012-13.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/deduction-on-savings-accounts-deposits-under-section-80-tta\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Deduction on Savings Accounts Deposits under Section 80 TTA\" \/>\n<meta property=\"og:description\" content=\"Section 80TTA of the Income Tax Act was introduced in the Finance Bill, 2013 and became applicable from the Financial Year of 2012-13.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/deduction-on-savings-accounts-deposits-under-section-80-tta\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-04-14T14:36:57+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-04-14T14:37:00+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Section-80TTA-of-the-Income-Tax-Act.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Deepti Shikha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/Deepti-Shikha.jpg","authorDescription":"Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. 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