When it’s time to file an income tax return, you may come across a lot of deductions that help reduce your taxable income. One such deduction under the Income Tax Act, 1961 is Section 80TTA. This section provides relief to individuals and Hindu Undivided Families (HUFs) on the interest earned from savings accounts.
If you’re wondering who can claim this deduction, how much you can claim, and what the conditions are, this article is for you. Let’s understand who is eligible for 80TTA deduction in the simplest way possible.
What is Section 80TTA?
Section 80TTA is a tax deduction available under Chapter VI-A of the Income Tax Act. It was introduced to encourage saving habits among individuals and HUFs.
Under this section, you can claim a deduction of up to ₹10,000 on the interest income earned from your savings bank accounts.
This means if you earn interest from a savings account in a bank, co-operative society, post office or any other organisation of like nature, you can help to minimize your taxable income by up to ₹10,000 of that interest income.
Who is Eligible to Claim the Deduction Under Section 80TTA?
Only the following types of taxpayers are eligible for this deduction:
1. Individuals
This includes:
- Salaried individuals
- Self-employed professionals or businesspeople
- Freelancers
- Any other individual taxpayer
2. Hindu Undivided Families (HUFs)
A Hindu Undivided Family can also claim a deduction under Section 80TTA on the interest earned by the HUF’s savings account.
Who Cannot Claim 80TTA Deduction?
Now, here is the important part—not everyone is eligible. The following are not eligible for the deduction under Section 80TTA:
1. Senior Citizens
If you are a senior citizen, i.e., aged 60 years or above, you cannot claim a deduction under 80TTA.
But don’t worry! You are covered under a different section—Section 80TTB—which offers a higher deduction of up to ₹50,000 on interest income from savings as well as fixed deposits.
2. Companies, Firms, or Associations
This deduction is not available to entities like:
- Private limited companies
- Partnership firms
- LLPs (Limited Liability Partnerships)
- Trusts or associations (like societies or NGOs)
Only individuals and HUFs can claim this benefit.
Key Features of Section 80TTA
1. Deduction Limit
- The maximum deduction available under Section 80TTA is ₹10,000 per financial year.
- If the total interest earned from all eligible savings accounts is less than ₹10,000, the actual interest amount can be claimed.
- If the total interest exceeds ₹10,000, only ₹10,000 is deductible, and the remaining amount is taxable as “Income from Other Sources.”
2. Multiple Accounts Considered
If you have savings accounts in multiple banks or institutions, the aggregate interest from all such accounts is considered for deduction under Section 80TTA.
For example, if you earn ₹4,000 from Bank A, ₹3,000 from Bank B, and ₹5,000 from a post office account, the total interest is ₹12,000. You can claim ₹10,000 as a deduction, and ₹2,000 will be taxable.
3. No Need for Separate Proof
Unlike the other deductions that require documentation (like medical bills or investment proofs), 80TTA does not require any type of submitting specific documents. However, maintaining bank interest certificates or account statements is advisable in case the tax authorities require verification.
What Type of Interest is Allowed Under 80TTA?
Only interest from savings accounts is allowed under 80TTA. This includes:
- A savings account in a bank
- Savings account in a co-operative society carrying on banking
- A savings account in a post office
Important: Fixed Deposits or Recurring Deposits Do Not Qualify
Interest from Fixed Deposits (FDs), Recurring Deposits (RDs), or any other term deposits is not eligible for deduction under Section 80TTA.
How Much Deduction is Allowed?
The maximum deduction allowed under Section 80TTA is:
₹10,000 per financial year
Here’s how it works:
- If your total interest from savings accounts is less than ₹10,000, you can claim the full amount.
- If it is more than ₹10,000, you can only claim up to ₹10,000.
The remaining interest is added to your taxable income and tax levy as per your applicable slab rate.
Example:
Suppose you earn ₹12,000 as interest from your savings account during the financial year. Here’s how 80TTA will apply:
- Deduction allowed: ₹10,000
- Taxable interest: ₹2,000 (added to your total income)
How to Claim the Deduction?
Here’s how you can claim the 80TTA deduction:
Step 1: Collect Interest Details
Check your bank statements or passbook to calculate the total sum of interest you earned on all your savings accounts in the financial year.
Step 2: Report Interest Income
Even if you’re going to claim a deduction under 80TTA, you must first declare the full interest income under the head “Income from Other Sources” in your income tax return.
Step 3: Claim Deduction in ITR
Under Chapter VI-A deductions in your ITR form, mention the amount eligible under Section 80TTA (maximum ₹10,000).
Difference Between Section 80TTA and 80TTB
| Feature | Section 80TTA | Section 80TTB |
| Who can claim? | Individuals and HUFs below 60 years | Senior citizens (60 years or above) |
| Maximum Deduction | ₹10,000 | ₹50,000 |
| Interest Type | Only from savings accounts | Savings, FDs, and RDs |
| Applicable to HUFs? | Yes | No |
So, if you’re a senior citizen, 80TTB is more beneficial. If you’re below 60, then 80TTA is what you should look at.
Conclusion
Section 80TTA is a small but useful deduction that can help you save a bit of tax. While ₹10,000 may not seem like a big amount, every rupee counts when you are managing your finances.
To make the most of it:
- Keep track of interest earned on all your savings accounts.
- Declare it properly in your ITR.
- Claim the deduction smartly if you’re eligible.
And remember, choose between the old and new tax regimes wisely, based on which one gives you more overall benefit.
FAQs on 80TTA Deduction
1. Can I claim 80TTA for multiple savings accounts?
Yes, you can add up the interest from all your savings accounts in banks, post offices, and co-operative banks. However, the maximum deduction allowed is ₹10,000 in total, not per account.
2. Is TDS deducted on savings account interest?
No, banks usually do not deduct TDS (Tax Deducted at Source) on savings account interest. But you still need to disclose and pay tax on interest over ₹10,000.
3. Can NRIs claim a deduction under 80TTA?
Yes, Non-Resident Indians (NRIs) can claim 80TTA deduction on savings interest from NRO accounts only. However, interest from NRE accounts is tax-free and hence does not need this deduction.
4. Is this deduction available in the new tax regime?
No. Under the new tax regime (Section 115BAC), most deductions and exemptions, including 80TTA, are not available. If you choose the new tax regime, you cannot claim 80TTA.
