What is Section 80TTA which covers interest on savings a/c?

Section 80TTA of the Income Tax Act, 1961 allows for a deduction of up to Rs. 10,000 on income earned from interest on savings accounts in banks, co-operative societies, or post offices. However, this deduction does not apply to interest earned from fixed deposits or recurring deposits.

Note: You can claim the Section 80TTA deduction only if you choose the old tax regime, as the new regime is now the default option.

Who is Eligible to Claim a Deduction on bank interestUnder Section 80TTA?

In order to claim a deduction under section 80TTA only Individuals
and HUFs are eligible.

Can NRIs Avail of a Deduction under 80TTA?

NRIs are eligible for a deduction under Section 80TTA as well. It's important to highlight that NRIs can open only two types of accounts in India:

NRE and NRO accounts. However, the benefit of Section 80TTA is available only to those holding NRO savings accounts, as the interest earned on NRE accounts is exempt from tax.

Which Types of Interest Income Are Eligible for Deduction Under Section 80TTA?

You can claim a deduction for interest income earned from the following sources:

1) Savings account with a bank

2) Savings account with a co-operative society engaged in banking business

3) Savings account with a post office

Types of Interest Income Not Eligible for Deduction Under Section 80TTA

The deduction under Section 80TTA is not applicable to the following types of interest income:

1) Interest from fixed deposits
2) Interest from recurring deposits
3) Interest from time deposits (deposits repayable after a fixed period)
4) Interest earned on corporate bonds and debentures
5) Interest from Provident Fund deposits 6) Interest from lending business

Maximum Interest Amount Allowed As Deduction on bank account Under Section 80TTA

The maximum deduction under Section 80TTA is capped at Rs. 10,000. If your interest income is less than Rs. 10,000, you can claim the full amount as a deduction. However, if your interest income exceeds Rs. 10,000, the deduction will be limited to Rs. 10,000. (Remember to calculate the total interest income from all your bank accounts if you hold multiple accounts.)

How to Avail the Interest on Savings a/c deduction Under Section 80TTA?

Start by adding your total interest income under the section ?Income from Other Sources? in your tax return. Next, calculate your gross total income for the financial year from all income sources and then claim the deduction under Section 80TTA.

Case study on 80TTA: Interest on Savings a/c

If Mr. B has a salary income of Rs. 6,00,000, interest from a savings account with a bank is Rs. 8,000, and interest from fixed deposits is Rs.12,000 in a financial year. Total amount that can be claimed as deduction u/s 80TTA is Rs. 8,000 as it is within the threshold limit prescribed ?Rs. 10,000?. Interest on Fixed Deposit cannot be claimed as deduction under this Section.

What is Section 80TTB, Deduction on interest on FD for senior citizens?

Section 80TTB allows resident senior citizens, aged 60 years or above at any point during a Financial Year (FY), to claim a specified deduction from their gross total income for that FY. This provision has been applicable since 1st April 2018.
Note: You can claim the Section 80TTB deduction only if you choose the old tax regime, as the new regime is now the default option.

Who is Eligible to Claim a Deduction on Interest on FD Under Section 80 TTB?

Individuals being Senior citizens are eligible to claim a deduction on interest on FD under section 80TTB.

What is the Amount Eligible for FD Interest Deduction Under Section 80 TTB?

A deduction of Rs. 50,000 or the total interest income, whichever is lower, can be claimed from the gross total income. The term "income" here refers to the aggregate interest income from the following sources:
1. Interest on bank deposits (both savings and fixed)
2. Interest on deposits with co-operative societies engaged in banking, including co-operative land mortgage banks or co-operative land development banks
3. Interest on post office deposits

What are the Exceptions to Section 80TTB?

If the specified deposits are held by or on behalf of a partnership firm, Association of Persons (AOP), or a Body of Individuals (BOI), the Section 80TTB deduction cannot be claimed by the partner of the firm or any member of the AOP or BOI when calculating their total income.

What is the difference between Section 80TTA and 80TTB on the basis of deduction?

Section 80TTA offers deductions similar to Section 80TTB but with some key differences. It allows a deduction of up to Rs. 10,000 on interest earned from savings accounts (held in a bank, co-operative bank, or post office) for taxpayers under the age of 60 years or for a Hindu Undivided Family (HUF).
However, with the introduction of Section 80TTB specifically for senior citizens, those aged 60 or above are no longer eligible for deductions under Section 80TTA.

What are the Documents Required to claim FD Interest deduction u/s 80 TTB?

There are no specific conditions to be met when claiming a deduction under Section 80TTB. To calculate your tax, you only need your PAN, interest certificates, and bank statements.

How Senior citizen enjoys more tax benefit than Non-senior citizen under section 80TTB?

As per Old Tax Regime, Senior citizen already has a higher basic exemption limit. Moreover, Non-senior citizen can claim only a savings interest deduction up to Rs. 10,000 u/s 80TTA; Whereas a senior citizen can claim savings interest and fixed deposits interest deduction restricted up to Rs. 50,000.

What is the Difference between 80TTA & 80TTB?

Following is the major difference between Section 80TTA and 80TTB based on Applicability, Specified Income & maximum Deduction:
1. Applicability: Section 80TTA applies to individuals and HUF except for senior citizens while Section 80TTB applies to senior citizens.
2. Specified income: Section 80TTA has Interest on savings accounts only While Section 80TTB has Interest on all kinds of deposits.
3. Maximum Deduction: Section 80TTA has a maximum deduction of up to ₹10,000 while Section 80TTB has a maximum deduction of up to ₹50,000.