Who can claim deduction under Section 80TTA?
Only Individual and HUF can claim this tax deduction. It is not available to firms, companies, etc. Even if a joint account is opened between individuals, this deduction is available.
Deduction under Section 80TTA is available for which account?
Deduction is available only on savings bank account interest. So, if you have a fixed deposit or a recurring deposit from which you get interest, you CANNOT claim deduction on that. Even interest from sweep-in FD is not allowed to be deducted.
From whom you should receive interest?
You can avail deduction only if it is received from:
How can I claim this deduction under Section 80TTA in my tax return? Download statement for all your bank statements for entire financial year (April 1 – March 31) In the credit section, total the amount of interest received during the year for all accounts. Show the total interest income under the head “Income from Other sources” In the deductions section, in Section 80TTA, claim a deduction of an amount equal to interest received or Rs. 10,000 whichever is less.
If I have multiple savings accounts, how can I claim interest as a deduction under Section 80TTA?
Just combine interest income from all the accounts and show under “Income from other sources”
I maintain a joint account with my wife. In this regard, how can I claim the interest as deduction under Section 80TTA?
In that regard, first question is in whose account the amount will be taxed. Some people are of the opinion that income will be taxed in account of first holder, but I think it is not a correct approach. In my view, taxability will depend on the proportion of funds invested by each of the joint holders. Accordingly, they individually can claim Section TTA deduction in their income tax return. So, suppose Mr. A and Mrs. A open a joint account and contribute Rs. 5 lac (full amount contributed by Mr. A), and interest is received as Rs. 20,000. In this case, Mr. A will have to show entire amount of Rs.20,000 in his tax returns (Even if first holder of account is Mrs. A) and he can claim a deduction upto Rs. 10000 u/s TTA in his return, so the next taxable income will be Rs. 10000. In this case, there will no implication in Mrs. A’s return. However, suppose Rs. 1 lac was contributed by Mr. A and Mrs. A in ratio of 50:50. Here, both can show Rs. 10000 as income in their respective returns and accordingly claim Rs. 10000 deduction u/s Section TTA.
I am a salaried employee. Do I need to mention the estimated interest in my investment declaration as a deduction under Section 80TTA?
No. Since you are not clear on how much amount of interest you will get, you can skip in the investment declaration. When you file returns, you can check up from bank statement and then incorporate in “Income from Other Sources” Alternatively, you can also mention an estimated figure depending upon the balance you keep in your account. But at the same time, also put the same amount (upto Rs. 10K) into Section TTA, so that your employer does not deduct extra TDS.
If I get tax deduction under Section 80TTA on interest upto Rs. 10K, does it make sense to keep large fund in savings account?
Though the tax deduction makes the income tax free, still the effective yield is 5%, which is very less. Unless you allocate money in your savings account as part of your contingency fund, which is a must have reserve in case of emergencies, you should try to allocate it to a proper financial goal and depending upon the time horizon, explore other better and profitable options. If you ask my view, I don’t prefer keeping large amounts in bank account for contingency purpose, because of the risks associated with misuse of lost ATM card, net banking fraud etc. Better to put the surplus money in good FD or liquid fund, than savings account.
Only Individual and HUF can claim this tax deduction. It is not available to firms, companies, etc. Even if a joint account is opened between individuals, this deduction is available.
Deduction under Section 80TTA is available for which account?
Deduction is available only on savings bank account interest. So, if you have a fixed deposit or a recurring deposit from which you get interest, you CANNOT claim deduction on that. Even interest from sweep-in FD is not allowed to be deducted.
From whom you should receive interest?
- Bank
- Co-operative
- society
- Post office
How can I claim this deduction under Section 80TTA in my tax return? Download statement for all your bank statements for entire financial year (April 1 – March 31) In the credit section, total the amount of interest received during the year for all accounts. Show the total interest income under the head “Income from Other sources” In the deductions section, in Section 80TTA, claim a deduction of an amount equal to interest received or Rs. 10,000 whichever is less.
If I have multiple savings accounts, how can I claim interest as a deduction under Section 80TTA?
Just combine interest income from all the accounts and show under “Income from other sources”
I maintain a joint account with my wife. In this regard, how can I claim the interest as deduction under Section 80TTA?
In that regard, first question is in whose account the amount will be taxed. Some people are of the opinion that income will be taxed in account of first holder, but I think it is not a correct approach. In my view, taxability will depend on the proportion of funds invested by each of the joint holders. Accordingly, they individually can claim Section TTA deduction in their income tax return. So, suppose Mr. A and Mrs. A open a joint account and contribute Rs. 5 lac (full amount contributed by Mr. A), and interest is received as Rs. 20,000. In this case, Mr. A will have to show entire amount of Rs.20,000 in his tax returns (Even if first holder of account is Mrs. A) and he can claim a deduction upto Rs. 10000 u/s TTA in his return, so the next taxable income will be Rs. 10000. In this case, there will no implication in Mrs. A’s return. However, suppose Rs. 1 lac was contributed by Mr. A and Mrs. A in ratio of 50:50. Here, both can show Rs. 10000 as income in their respective returns and accordingly claim Rs. 10000 deduction u/s Section TTA.
I am a salaried employee. Do I need to mention the estimated interest in my investment declaration as a deduction under Section 80TTA?
No. Since you are not clear on how much amount of interest you will get, you can skip in the investment declaration. When you file returns, you can check up from bank statement and then incorporate in “Income from Other Sources” Alternatively, you can also mention an estimated figure depending upon the balance you keep in your account. But at the same time, also put the same amount (upto Rs. 10K) into Section TTA, so that your employer does not deduct extra TDS.
If I get tax deduction under Section 80TTA on interest upto Rs. 10K, does it make sense to keep large fund in savings account?
Though the tax deduction makes the income tax free, still the effective yield is 5%, which is very less. Unless you allocate money in your savings account as part of your contingency fund, which is a must have reserve in case of emergencies, you should try to allocate it to a proper financial goal and depending upon the time horizon, explore other better and profitable options. If you ask my view, I don’t prefer keeping large amounts in bank account for contingency purpose, because of the risks associated with misuse of lost ATM card, net banking fraud etc. Better to put the surplus money in good FD or liquid fund, than savings account.
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