Last updated on July 24th, 2022 at 09:37 am
Income Tax Deduction of interest on deposits
Deduction in respect of interest income on deposits can be claimed under section 80TTB by senior citizens & under section 80TTA by non-senior citizens & HUFs. Both the sections were introduced in the Finance Bill, 2018, and were made effective on 1 April 2018.
Income Tax Deduction of interest on deposits
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|
Particulars |
Sec 80TTA | Sec 80TTB |
| Eligible Assessee | Individuals up to 60 years, NRI & HUFs |
Senior citizens & Super Senior Citizens |
|
Maximum Deduction |
Rs. 10,000/- | Rs. 50,000/- |
| Interest | Interest from Savings bank account |
Interest from Savings as well as fixed deposits |
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Conditions to avail the deduction of interest on deposits
Interest income should be earned from
- A savings account with a BANK
- A savings account with a CO-OPERATIVE BANK
- A savings account with a POST OFFICE
Note: Interest income derived by keeping deposits with companies, firms, or Non-Banking Finance Companies (NBFCs), friends, and relatives will not be eligible for deduction under this section.
Who is eligible to claim deduction u/s 80TTA?
Individuals up to the age of 60 years
Non-Resident Individuals
and
All HUFs
are allowed to claim the deduction under section 80TTA.
Note: Interest earned by firms/companies on deposits with saving bank accounts is fully taxable and they can not claim deduction under this section.
Who is eligible to claim deduction u/s 80TTB?
Individuals above the age of 60 years i.e Senior & Super Senior Citizen
are allowed to claim the deduction under section 80TTB.
Note: Interest earned by firms/companies on deposits with saving bank accounts is fully taxable and they can not claim deduction under this section.
How to claim deduction u/s 80TTA & U/s 80TTB?
To claim the deduction one needs to first show the interest income under the head “Income from Other Sources” and then claim the deduction under section 80TTA/80TTB.
What is the amount of maximum deduction allowed under section 80TTA?
The maximum deduction available while computing the total income of the assessee will be
- Rs. 10,000/- or
- Amount of such interest income
whichever is lower.
Note: Total interest income derived from deposits from all the specified institutions shall be taken into account.
What is the amount of maximum deduction allowed under section 80TTB?
The maximum deduction available while computing the total income of the assessee will be
- Rs. 50,000/- or
- Amount of such interest income
whichever is lower.
Note: Total interest income derived from deposits from all the specified institutions shall be taken into account.
Is it possible to claim a deduction for interest from fixed deposits/recurring deposits/term deposits under section 80TTA?
NO. Interest income earned by way of time deposits has been specifically excluded from the purview of deduction u/s 80TTA. Time deposits mean the deposits that are repayable on the expiry of fixed terms. Hence interest income from the fixed deposits/recurring deposits/term deposits will not be eligible for deduction under section 80TTA.
Is it possible to claim a deduction for interest from fixed deposits/recurring deposits/term deposits under section 80TTB?
YES. Interest income earned from all kinds of deposits will be eligible for deduction under section 80TTB. There is no specific exclusion of interest from term deposits like in section 80TTA.
Hence, interest income earned from fixed deposits/recurring deposits/term deposits will be eligible for deduction under section 80TTB.
Can NRI claim deduction u/s 80TTA or 80TTB?
NRI can claim deduction under section 80TTA.
Can HUF claim deduction u/s 80TTA or 80TTB?
HUF can claim deduction under section 80TTA.
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