Income Tax Deduction on Interest on Saving Bank Account, Section 80TTA of Income Tax Act

Income Tax Deduction in respect of interest on deposits in savings account under Section 80TTA of Income Tax Act, 1961. For giving additional income tax deduction on Interest on Saving Bank Account  new section 80TTA under Income Tax Act,1961 was  introduced through Finance Act, 2012. This additional deduction u/s 80TTA is applicable only to individual and HUF on interest income from bank saving account .i.e this deduction is not applicable on interest received on time deposit/term deposit.

Eligible Assessee for section 80TTA: only Individual and HUF are elegible under this section, so a firm, an association of persons or a body of individuals will not get the benefit of this section.

Deduction Limit/ Maximum Deduction under Section 80TTA:  Rs 10,000/- or actual interest receipt from saving bank account , which ever is lower. Example1. if person receive interest of Rs 15000/- from saving bank account then he has to pay tax on Rs 5000/- and Rs 10,000/- he can claim as deduction u/s 80TTA. Example2. if person receive interest of Rs 9000/- from saving bank account then he don’t have to pay tax on Rs 9000/- and Rs 9,000/-  can be claimed as deduction u/s 80TTA.

Meaning of Term Deposit: The deposits under the Scheme mean “term deposits” received by the bank for a fixed period and withdrawable only after the expiry of the said fixed period and includes Reinvestment Deposits and Cash Certificates or other deposits of similar nature.

Reference: Section 80TTA  

Deduction in respect of interest on deposits in savings account.

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.

For definition of “Post Office” as defined in section 2(k) of the Indian Post Office Act, 1898

19 thoughts to “Income Tax Deduction on Interest on Saving Bank Account, Section 80TTA of Income Tax Act”

  1. Is there any deduction on earned interest on Fixed deposit in AY 2013-14 which was 10000/-in previous AY ie.2012-13.

    1. I and my wife have a joint savings account.My salary is deposited in this account and home loan deduction is also through this account.My wife transfers (from her account)50% home loan share to this account. Is the interest earned in this savings joint account, applicable for deduction under section 80TTA? If so, Can I, take the full deduction or will there be a split in deduction?

  2. Pl guide if Net SB Interest (i.e. after deducting 10000 u/s 80TTA) is to be shown in IT return or first entire amount, then ‘Less 10000’ & subtraction (net interest) to be added to Total Income.

  3. what happens when the net result under the head income from other sources inclusive of the savings account interest of Rs.12000/- results in a loss under that head which is set off against the income under the head Profits & Gains of Business. After the set-off of loss under the head other sources it still results in gross total income of Rs.260000/-. whether the individual is still entitled to claim deduction u/s.80TTA to the tune of Rs.10000/- ?????

  4. if interest on saving account is less than Rs100 then we need to show it in ITR
    previously i filed the return in ITR1 in Ay 2012-13 while having agricultue income and shows the total of commission income and agriculture under other income head

    so if this time i use ITR2 in AY2013-14 then their will be any objection from income tax department?
    in both assesment years the total of both income is less than taxable income .

    1. You can show any amount in ITR and Interest in saving account can be shown as other income and again claim deduction under section 80TTA
      and you can select any type of return depending on the source of Income

      1. thanks for the reply
        can you tell me that if agriculture income is only from selling the crop. Then the total price of sold crop is counted as income or the money left after deducting the expenditure on growing the crop?

  5. If I have interest income from savings accounts of more than Rs. 10,000 (assume Rs. 11,000), what do I need to show in 80TTA under amount section (there are 2 sections, Amount and System calculated). Do I need to show 11,000 under amount and system calculated would calculate maximum allowed as 10,000 automatically and use 10,000? Plz advise.

  6. what about someone having interest on Fixed deposit/term deposit .how to calculate the amount from bank statement and how to show it in ITR?

    1. You can show interest income from fixed deposit or Term Deposit as other income under ITR.
      How to search. see the credit side of Bank Statement and Bank give description of same .i.e nature of credit

  7. This year I have only income of Rs. 4500/ from bank interest. I forgot to submit FORM 15H. Bank says that i can get it if i file the tax. I never filed for the tax.
    Which ITR i should apply to get refund? please advice.

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