Income Tax Return AY 2022-23 or FY 2021-22: Did you know that you can claim an income tax deduction of up to Rs 10,000 for the interest received from your savings bank accounts? Let's take a look at how Section 80TTA works
The last date of filing income tax return (ITR) for the assessment year 2022-23 or the financial year 2021-22 is July 31, 2022. Taxpayers filing their income tax returns under the old tax regime, are eligible for multiple tax deductions and exemptions. Did you know that you can claim an income tax deduction of up to Rs 10,000 for the interest received from your savings bank accounts? Let’s take a look at how it works
Section 80TTA Deduction Explained
Section 80TTA of the Income Tax Act, 1961, allows taxpayers to claim a deduction for the interest earned from savings account. The maximum deduction allowed under this Section 80TTA is Rs 10,000.
Taxpayers are eligible to claim the deduction if the interest income received from the following —
a) From a savings account with a bank,
b) From a savings account with a co-operative society or bank,
c) Post-office savings schemes.
Moreover, the tax benefit can be claimed for any number of accounts till the aggregate interest amount of Rs 10,000.
The deduction under section 80TTA is over and above the Rs 1.5 lakh limit of Section 80C.
Which Interest Income Are Not Allowed as Deduction Under Section 80TTA?
It must be noted that deduction under Section 80TTA are not allowed for the interest income from fixed deposits or recurring deposits or any other time deposits. Interest received from the deposits in non-banking finance companies (NBCSs) will not be eligible for the tax benefits under Section 80TTA.
Who are Eligible to Claim a Deduction Under Section 80TTA?
Individual taxpayers residing in India and Hindu Undivided Family (HUF) are eligible to claim deductions under Section 80TTA. Non-Resident Indians (NRIs) can get tax benefits for their Non-Resident Ordinary or NRO savings accounts under Section 80TTA. NRIs can only hold Non-Resident External (NRE) and NRO savings account in India. As NRE saving account is already tax-free, Section 80TTA only applies to only interest earned on the NRO savings account.
It is important to note that the senior citizens aged 60 years are not eligible to claim deductions under Section 80TTA as they can claim deductions under Section 80TTB.
Those who opt for the new tax regime under Section 115BAC, can not claim the the tax benefits under Section 80TTA.
How to Claim Deduction Under Section 80 TTA
Taxpayers must note that this is a deduction and not an exemption. So, while filing an income tax return, individuals need to first add their total interest income under the head of ‘Income from Other Sources’. Then, they can calculate the gross total income from income heads for the financial year and then show it as a deduction under Section 80TTA.
Individuals must report all the income earned during a financial year, during filing an ITR. Failing to do this, can attract penalty for non-compliance.