Section 80TTA | How to Claim Deduction on Interest

Section 80TTA provides a deduction of Rs 10,000 on interest earned on the Savings account. However, only individuals and HUFs can claim deduction under this section.

So, Senior citizens can claim deduction under section 80TTB, with has a higher deduction limit of Rs 50,000. Furthermore, you cannot claim an 80TTA deduction for interest earned on time deposits such as fixed deposits or recurring deposits.

Key Points

– Maximum deduction that you can claim under section 80TTA is Rs 10,000.
– Deduction is allowed on interest income.
– Only Interest earned on a Savings account is allowed as a deduction.
– Savings account with a bank, cooperative society, or post office is eligible for this deduction.
– Interest income on fixed deposits, recurring deposits, or other time deposits is not allowed as a deduction.
– Only Individuals and Hindu Undivided Families (HUF) can avail of this deduction.
– Senior citizens cannot claim deduction under this section.
– Mandatory to disclose interest income while filing your income tax returns.

80TTA Deduction for AY 2021-22 Maximum Limit

As per the Income Tax Act, the 80TTA limit for AY 2021-22 is Rs 10,000.

Suppose your interest income from the Savings account and post office savings account is less than Rs 10,000; you can claim the entire amount as your deduction.

However, if your interest income is more than Rs 10,000, you can claim only up to the maximum limit of Rs 10,000.

You can also calculate the maximum amount you can claim as a deduction under this section for AY 2021-22 using the calculator available on the official income tax website.

Deduction under section 80TTA income tax form

Type of interest Income on which Claiming 80TTA deduction is Allowed

You can claim tax deduction under section 80TTA on

(1) Interest income from Savings Bank account

(2) Interest income from Cooperative Bank Savings Account

(3) Interest income from Post office saving account

Deduction under 80TTA Is Not Allowed

  1. Interest in Fixed Deposits.

2. Interest in any Time deposits.

3. Interest in Recurring deposits.

Section 80TTA of Income Tax Act Extract

How to claim deduction under section 80TTA?

Steps to claim deduction under this section are as follows

(1) Go to the new income tax portal and download the common offline utility.

(2) Double click on the efiling application and click on File Returns.

(3) Select Download Pre-filled Data and Click on Continue.

(4) Login with your credentials and select status and ITR-1 form. And your data from Form 16 will auto-populate. You need to confirm the details under the fields personal details, Gross Total Income, Total Deductions, Tax Paid and, Total Tax Liability.

(5) For the purpose of this article we shall be seeing in detail ” Total Deductions”. To claim an 80TTA deduction, firstly you must declare Interest income under the head “Income from Other Sources”. We will see how to do that. Click on Gross Total Income, check the options applicable to you and click on continue. Below is an example of a typical Gross Total Income.

(6) Once you confirm you will get the screen with details under the heads “Income from Salary”, Income from House Property”, “Income from Other Sources” and “Exempt Income”.

(7) Click on Add Another in the above screen and the below details will appear. Here you must declare your total interest income from your savings bank account. Select “yes” on the one applicable to you and enter the amount and click on continue.

(8) It will reflect as below. Click on confirm.

(9) Now click on Total Deductions. Scroll down to the option ” Are you eligible to claim any deduction”

Below deductions will reflect. To claim an 80TTA deduction, select the option and enter the interest amount.

Note that you will get a warning message. Just ignore that and click on Continue.

(10) You can see the 80TTA deduction under Verify your deductions along with other deductions. You may edit if you like.

Note that without showing interest income under Income from other sources, you will not be able to claim the deduction.

80TTA Deduction for AY 2021-22 for Non Resident

A Non-Resident Indian (NRI) with an NRO account can claim an 80TTA deduction of Rs 10,000 for AY 2021-22 on the interest income from the Savings Account only. They cannot claim a deduction on fixed deposits.

Differences between 80TTA and 80TTB

Below are the key differences

Section 80TTASection 80TTB
Can avail deduction only on the interest earned on Savings Account.Can avail deduction on both fixed deposit and Savings account.
Individuals and HUFs are eligible to claim the deduction.Only Senior citizens are eligible to claim the deduction.
The maximum limit under this section is Rs 10,000.The maximum limit under this section is Rs 50,000.

NRI with NRO account can claim this deduction.
NRI cannot claim this deduction.

FAQs

1. Does 80TTA include FD interest?

The deduction is not allowed on interest earned on time deposits such as fixed deposits or recurring deposits.

2. Can 80TTA and 80TTB both be claimed?

Individuals and HUFs can claim deduction only under section 80TTA, and Senior citizens can claim deduction only under section 80TTB.

3. What are Time deposits?

Time deposits are those deposits repayable on the expiry of fixed periods.

4. Can Non-Residential Indians avail of the tax deduction under section 80TTA?

You can claim tax deduction under section 80TTA on the Non-Resident Ordinary or NRO savings bank account. However, this deduction is not available on the NRO Fixed Deposit account.

5. If an assessee earns interest from multiple savings accounts, will they be able to claim tax deduction under section 80TTA?

Yes, of course, you can claim a maximum deduction of Rs 10,000 on interest earned on savings accounts.

6. What is the difference between 80TTA and 80TTB?

Section 80TTA provides relief to individuals and HUFs, excluding senior citizens for interest income from savings accounts. But, Section 80TTB offered relief only to senior citizens for interest income from the savings account and fixed deposit account.

7. Is interest in savings account taxable?

Yes, the interest earned on your savings account is taxable. So, even if it is not a considerable amount, you must disclose the same under the head “Income from other sources” while filing your income tax return.

8. What is the deduction limit available under section 80TTA for the financial year 2020-21?

A maximum limit of Rs 10000 is available under sec 80tta for fy 2020-21.

9. Do I need to declare bank interest on my tax return?

Declaring your interest income on your tax return is mandatory.

10. What is 80TTA?

80TTA means a section under Income Tax Act 1961 wherein any individual can claim a deduction for interest income from savings account except senior citizens.

11. What if I do not disclose the interest income in my ITR?

If you do not disclose the interest income, if the authorities pick your ITR for scrutiny and find out, you will be liable to pay the penalty in addition to the tax amount for non-compliance.

Also Read Income Tax Return Filing 2020 Last Date Extended

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