Section 80TTA of Income Tax offers a tax deduction for earning interest income. This tax benefit is applicable with some conditions and limitations. Do you want to know how to avail a tax deduction against interest received? Keep reading!
The following incomes qualify for deductions u/s 80TTA:
This provision considers a bank notified under the Banking Regulation Act, 1949 and a post office specified in the Indian Post Office Act, 1898.
Also read: Section 206 of the Income Tax Act
Deductions are not available for the following:
The maximum deduction limit is Rs. 10,000. When interest earned is below Rs. 10,000, the total interest income is your tax deduction. When interest earned is above Rs. 10,000, the tax deduction will be Rs. 10,000. Individuals must calculate interest income from all their bank accounts.
Your entire interest amount will come under the head ‘Income from other sources of the IT return. Section 80 highlights the deductions under this provision.
Here’s an example showing the calculation of taxable income after taking into account certain deductions, including Section 80TTA of the Income Tax Act:
In a fiscal year, Meena’s annual salary is Rs. 4,00,000, savings account interest is Rs. 4,000, and fixed deposit interest is Rs. 13,000. Deduction applicable u/s 80C is Rs. 9,000. So, you can calculate taxable income in the following way:
|Income||Amount (Rs.)||Amount (Rs.)|
|Earnings from some other sources: Savings account interest, Fixed deposit interest|
|Deduction under Chapter VI-A80TTA80C|
So, the taxable salary of Meena amounts to Rs. 4,04,000.
The following assessees can claim tax deductions under Section 80TTA of the Income Tax Act:
The following assessees do not qualify for 80TTA deductions:
This means that a member of an association or a partner in a firm cannot claim deductions under Section 80TTA of the Income Tax Act.
Also read: Section 16 of the Income Tax Act
The Income Tax Department aims to reduce the tax burden of the citizens by offering deductions under various sections of ITA. A taxpayer must know the details of the deductions applicable under different Sections. 80TTA allows a deduction of up to Rs. 10,000 on the interest amount. The residual interest income (if any) gets added to the total income and is taxable.
Ans: Section 80TTB is applicable when a taxpayer’s gross income covers any interest from deposits. This provision allows a tax deduction on such an interest amount. However, the taxpayer must be a senior citizen and an Indian resident. A senior citizen is aged 60 years and above during a relevant preceding year.
Ans: In a fiscal year, Section 80TTB offers a deduction of up to Rs. 50,000. If the interest amount is below Rs. 50,000, the total interest gets deducted. However, if the interest income is above Rs. 50,000, then the maximum deduction limit (Rs. 50,000) gets deducted.
The interest income u/s 80TTB must be from a deposit in any of the following:
> Post office
> Registered bank
> Co-operative society
Ans: As per the Income Tax Act, every person having a taxable income needs to file income tax return for a financial year. If a taxpayer doesn’t report the year’s earnings (unknowingly or intentionally), he/she will be penalized for non-compliance. The person will have to pay the tax due with interest.
Ans: The tax department considers a category of income for ‘business and profession’. The earning from profession and business includes income earned by contractors, freelancers, businesses and self-employed people. Additionally, it covers the incomes of lawyers, doctors, chartered accountants, insurance agents and tuition teachers.
Ans: Bank details, a record of tax-saving payments, Form 16-A, Form 26-AS and Form 16 are some of the important documents required for ITR filing. Furthermore, your income source will determine the type of details you require.
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