How to claim the deduction on interest income under section 80TTA/ 80TTB?
Under section 80TTA, if you earn income your bank deposit, that would be exempted (but not wholly).
The income received in the form of interest from a bank savings account is taxable, however, amount up to ₹ 10000 is exempted u/s 80tta.
Income interest from a bank deposit in any form if exceeding from ₹ 10000 is taxable under “Income from other sources“.
How to calculate 80tta deduction amount
Computation of amount received from interest earned from bank deposits is not rocket science.
The taxpayer required to arrange the bank statement for all your accounts for the particular financial year.
Any interest received quarterly, halfyearly or annually against post office saving and the amount in saving bank account is treated as income received from interest.
Deduction under Section 80TTA is not available to senior citizens.
Section 80TTB for Senior citizen
Section 80TTB is the new amendment introduced in the budget 2018 for the senior citizen.
Senior citizens can avail the benefit of interest income u/s 80TTB up to ₹ 50000 on all kind of interest income.
Let us consider the following incomes for a senior citizen:
- Interest on bank deposits (savings or fixed).
- Interest on deposits held in the co-operative society.
- Interest on post office deposits.
Difference between section 80TTA and 80TTB
Important Note:- Section 80TTB is introduced in budget 2018 for the senior citizen.
Example on tax savings u/s 80TTA & 80TTB
So saving account interest is eligible for tax deduction under section 80TTA but the FD and RD don’t qualify for this section for the normal taxpayer but in case of senior citizen interest from all kind of deposit (FS, RD, saving account, term deposit) is eligible for tax deduction under section 80TTB.
FAQ u/s 80TTA and 80TTB
Question: If having more than one saving accounts, Is the interest income of each account is eligible for tax deduction?
Answer: No, It is required to add all the interest income of all your saving account, and then apply u/s 80tta & 80ttb.
Question: Is bank deduct TDS from interest from savings account both for a senior citizen as well as Normal taxpayer.
Answer: No, TDS is not applicable on interest on the savings account, rather, bank deduct TDS from interest paid against Fixed Deposit or recurring deposit. If the account holder submits Form G/H Tds on FD or RD will not be deducted.
Question: If the income of interest from saving account exceed exemption limit i.e. 10,000 for the normal taxpayer and 50,000 for senior citizen. What would be the tax scenario?
Answer: You have to enter the maximum exemption account in 80TTA/80TTB column of Income-tax form and rest of the amount required to mention in Income from other sources.
Question: Is the interest from a saving account in India completely tax-free? If not, what is the limit before it is taxed?
Answer: Interest from saving account is exempted u/s 80tta maximum limit up to ₹ 10000 for normal taxpayer and ₹ 50,000 u/s 80ttb for senior citizen. It is also mandatory to disclose your completed income from the interest of saving account under head Income from other sources.
Question: Do we have to declare interest income from Savings, FD, and RD even though it’s below Rs. 10,000 (Exemption Limit) while filing an ITR?
Answer: Yes, You have to mention it in Income from other sources and also mention the amount u/s 80tta or 80ttb and will get the exemption.
Question: If eligible for both, can I claim exemptions of ₹ 150k under Section 80C and ₹ 10k under Section 80TTA for a total of ₹ 160k?
Answer: Yes, you can, in addition, section 80TTB is introduced for senior citizen for the maximum limit of ₹ 50K.