Income Tax Under Section 80TTA for the financial year 2022-23
Under the Indian Income Tax Act, several deductions are provided to the Indian taxpayer to reduce his tax liability and thus reduce his tax bill. These deductions can be through salary, investment or payment.
Under Section 80TTA of the Income Tax Act, tax exemption is provided to eligible taxpayers on interest earned in a savings account. The savings account in question may be held in a bank, a cooperative society or a post office.
In other words,
Section 80TTA became part of the Finance Act in 2013 and has provided relief too many taxpayers since then.
However,Let us examine the terms and conditions for availing the benefits of Section 80TTA.
This exemption is made under Section 80TTA- Terms and Conditions
The terms and conditions regarding tax deduction under Section 80TTA are given below:
Up to INR 10,000 can be deducted in a year from interest earned in savings accounts
Deductions can be claimed by Hindu Non-Sharing Individuals and Families (HUF) .
If an entity has more than one savings account with multiple banks, the combined interest income from all the accounts must be below INR 10,000 to avail the deductions.
If the accrued interest income in the above case exceeds the limit of INR 10,000, tax exemption of INR 10,000 can be claimed and the remaining amount will be subject to tax.
For instance,To be eligible to claim deductions under 80TTA
According to the Income Tax Act, deductions under Section 80TTA can be claimed for:
Taxpayers belonging to the category of Hindu Undivided Individuals or Families (HUF) .
Non-resident Indians (NRIs) holding NRO savings accounts
This entity holds savings accounts with institutions such as banks, post offices or co-operative societies
Claim of tax deductions 80TTA
In addition, Under Section 80TTA, tax deduction of up to INR 10,000 can be claimed for an eligible beneficiary exceeding the Section 80C limit of INR 1.5 Lac. Be sure to include interest from bank savings accounts in the Income from other sources section when filing your income tax return.
Exceptions under Section 80TTA
After that, If the total gross income of an entity is below the slab of minimum taxable income, it cannot claim tax deduction under Section 80TTA
Similarly, Senior citizens cannot avail tax deduction under Section 80TTA
The 80TTA tax exemption does not apply to the following:
NBFC (Non-Banking Financial Companies) deposits .
NRI holders of NRE account cannot claim tax deductions under Section 80TTA as NRE accounts are tax free.
Therefore, many savings account holders are unaware of the tax liability on interest earned on savings accounts. Section 80TTA of the Income Tax Act 1961 talks about the income tax exemption provided for interest earned on savings accounts, with a maximum deduction of INR 10,000 per annum.
Deduction applicable to Hindu Undivided Individuals or Families (HUF).
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