What is Section 80TTA?
Section 80TTA is a part of the Income tax of 1961 that allows a deduction of upto Rs.10,000 on the interest income. This deduction was introduced in the Finance bill of 2013 and is still applicable.
What is the maximum amount of deduction allowed under Section 80TTA?
The maximum amount of deduction allowed under this section is Rs.10,000. This deduction is applicable even when your interest income is less than Rs.10,000 for one month. In that case, the whole interest income is counted for deduction.
If your interest income exceeds Rs.10,000, then the deduction will be limited to Rs.10,000. In order to calculate your interest income, you need to count all the interest earned from banks, in which you have a savings account.It is to be noted that the deduction allowed under Section 80TTA is excluding that of Section 80C.
Who can avail the deduction under section 80TTA?
The deduction under this section can be availed by:
- An Individual below 60 years of age
- A Hindu Undivided Family (HUF)
Are NRIs eligible for this deduction?
Yes, NRIs are very much eligible for this deduction. NRIs can open two types of accounts in India. They are: NRE and NRO. The interest income from NRE savings accounts is already tax free. NRO accounts, on the other hand, are charged with the applicable tax.
List of accounts considered for Section 80TTA deductions
The accounts that are counted for Section 80TTA deductions are the following:
- Post Office savings account
- Banking companies that have been formed under banking regulation act of 1949
- Government registered cooperative societies that have a savings account
List of accounts excluded from Section 80TTA deductions
The accounts that are not counted for this deduction are the following:
- Interest income from Fixed deposits
- Interest income from Recurring deposits
- Deposits from NBFCs