Section 80TTA of Income Tax Act, 1961 provides for a deduction of upto Rs 10,000 from the interest income earned from savings deposits with a Bank or Post Office, during the relevant previous year.
However, from Assessment Year 2019-20, the Senior Citizens (i.e. individuals who are resident in India and are of the age of sixty years or more at any time during the relevant previous year) can’t claim deduction under this Section 80TTA, as they shall be allowed a higher deduction of upto Rs 50,000 under new Section 80TTB.
Deduction Limit
80TTA deduction can be availed upto a maximum of Rs. 10,000, i.e. Interest Income on Savings Deposits during the relevant Previous Year or Rs. 10,000 whichever is minimum.
Further, this deduction is available in addition to exemption u/s 10(15)(i) of Rs 3,500 for individual account holders and Rs 7,000 in the case of joint account holders, in respect of interest from savings deposits with post offices, as per CBDT Notification 32/2011.
Eligible Income
80TTA deduction is available only in respect of interest income on savings deposits maintained with any Bank/ Banking Company, Co-operative Bank or Post Office. However, it may be noted that interest income from time-deposits, term-deposits or fixed deposits is not eligible for this deduction.
Eligible Persons
Section 80TTA deduction is available to persons from the Individuals or HUFs category only, irrespective of their residential status, unlike deduction under section 80TTB which is available to resident individuals only. All other persons, like Firms, Companies, etc. are not allowed/ eligible to claim this deduction.
No Deduction in New Regime
Deduction under section 80TTA is not available to assessees those who fall under the new tax regime (section 115BAC).
Text of Section 80TTA: Deduction in respect of interest on deposits in savings account