Exemptions Under Section 80TTA
Do you know that the interest earned on your savings account is also taxable? But don’t worry you can claim a tax exemption on your savings account interest income as per section 80TTA of the Income Tax Act. It was introduced by the Indian government in the year 2013 to promote the habit of savings by the individuals and to give some relief to retired individuals and senior citizens who rely heavily on interests for their regular income.
Section 80TTA allows the individuals to claim the tax deductions on the interest income of the savings account to the extent of Rs.10,000 p.a
Section 80TTA FEATURES
Below we have mentioned some features of the section 80TTA which will help you understand better and thereby save your taxes.
- Tax deduction can be claimed by any individual or Hindu Undivided Families(HUFs).
- It is applicable to only the savings account held by an individual in :
- Cooperative Societies
- Savings account with Post Office.
- It only allows exemptions limited to Rs.10,000 p.a. on total interest income earned from all the saving accounts held by an individual.
You can include all of your saving accounts with different Banks, Cooperative societies, Post Office and if the total interest earned on them is more than Rs.10,000 then only 10,000 from that amount is eligible for exemption and the amount above 10,000 will be taxed as per the income tax slab rate that applies to an individual (under the head “Income from Other Sources”).
- This is an exemption additional to the amount that can be claimed under the Section 80c of Income Tax Act i.e of 1,50,000.
- An important point to be noted here is that it only applies to the interest income on saving accounts. Following accounts are not eligible :
- Fixed Deposit, Recurring Deposits, Time deposits with Banks or other mentioned institutions.
- Deposits with NBFCs(Non Banking Financial Companies)or any other Financial institutions.
- This is applicable only to the individuals below the age of 60. People above 60 i.e senior citizens can claim a higher deduction of Rs.50,000 as per the Section 80TTB of Income Tax Act and is applicable to all the deposits(Fixed Deposits, RDs, time deposits and other saving schemes with banks, cooperative societies & post offices)