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Section 80TTA – Deduction of Interest from Savings Account

Deduction under section 80TTA is applicable from financial year 2012-13.

Eligible Assessee – Individual or HUF (Whether resident or non resident). No benefit is available to partnership firms, company, LLP, AOP etc.

Deductible Amount – Interest on deposits in saving account (not being time deposit) upto a maximum of rs. 10,000. “Time deposits” means the deposits repayable on expiry of fixed periods.

Saving account held with a banking company, a co-operative bank or a post office is eligible for deduction. Deduction is not available on interest from fixed deposits (FD).

This is not an exempted income, therefore while filing return total interest earned is to be shown as income under the head “Income from other sources” and then deduction under section 80TTA is to be taken subject to maximum limit of rs. 10,000.

TDS under section 194A is not applicable on saving bank interest. Therefore no tds is liable to be deducted on interest from savings account.

When interest is received on any deposit in savings account held on behalf of firm, association of persons or body of individuals then no deduction is available in respect of such interest to partner of firm or member of association of persons or body of individuals.

Bare Act for Section 80TTA

Bare Act for Section 80TTA

80TTA. (1) Where the gross total income of an assessee, being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) in a savings account with—

(a)  a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);

(b)  a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or

(c)  a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),

there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee a deduction as specified hereunder, namely:—

 (i)  in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and

(ii)  in any other case, ten thousand rupees.

(2) Where the income referred to in this section is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

Explanation.—For the purposes of this section, “time deposits” means the deposits repayable on expiry of fixed periods.

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