"Great things never came from comfort zones"           "Wealthy people invest first and spend what’s left and broke people spend first and invest what’s left"           "Good, better, best. Never let it rest. Till your good is better and your better is best"           "Investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future"           "You cannot save time for future use, but you can invest it for the future you"           "The secret to getting ahead is getting started.................Start using your Savings to Earn Money"           "The best gift, and investment, you can give your child is your time"           "Investing in your child’s education is never a wasted effort"           "Do something today that your future self will thank you for"

deduction-on-interest-income-under-section-80tta-80ttb

 

Deduction on Interest Income: Under Section 80TTA/80TTB

406 views
9
80TTA Deduction Limit (Maximum Rs. 10,000)
Eligibility-
This deduction is available to a Resident Individuals or HUF.
See the related post : How to E-file Income Tax Return
Deduction limit-
The deduction can be availed on Interest earned on saving accounts up to a maximum of Rs. 10,000 during the financial year. If Interest income is less than 10,000 then the entire amount of interest is eligible for deduction or if interest income is greater than 10,000 then the deduction can be availed up to Rs. 10,000 during the financial year.

This deduction is allowed on Interest earned-
  • From savings account with a bank
  • From savings account with a co-operative society carrying on banking business
  • From a savings account with a post office

This deduction is NOT allowed on interest earned on time deposits /fixed deposit-
  • Interest from fixed deposits
  • Interest from recurring deposits
  • Any other time deposits

Tax Deduction under section 194A-
No TDS will be deducted under section 194-A, on interest income from saving account held with Banks, Co-operative societies engaged in banking business or post offices up to the amount of Rs. 10,000 during any financial year to any Resident Individual or HUF. 

Example
Mr. Samir age of 35 years, having their interest income for the year 2017-18 as below, what will be the amount of deduction under section 80TTA?
  1. Savings bank interest of Rs 10,000
  2. Interest on fixed deposits of Rs 80,000
  3. Other income of Rs 2,50,000
  4. Post office saving interest of Rs. 8,000
Answer:-
Taxable Income under the head of "Income from Other Sources"-
Particulars Amount (Rs.)
Saving Bank Interest 10,000
Interest on Fixed Deposits 80,000
Other Income 2,50,000
Post office Saving Interest 8,000
Total Income 3,48,000
Less: deduction Under section 80TTA 10,000
Gross Taxable Income 3,38,000
Note:-
In the above example the interest from saving account is Rs. 18,000 but deduction is allowed up to Rs. 10,000 under section 80TTA.

As you aware there is no change in income tax slabs for senior citizens, a little bonus is allowed for interest income on their savings account and FDs are allowable to the extent of Rs. 50,000/- u/s 80TTB w.e.f. 01.04.2018. They do not consider both exemptions under section 80TTA & 80TTB individually.

80TTB Deduction Limit (maximum Rs. 50,000)

Eligibility-
This deduction is available only for Resident Senior Citizens.

Deduction limit-
The deduction is available only for senior citizen who is holding the FDs with Banks, Co-operative Banks and also in Post Offices and earning the interest income then you are eligible to claim up to the maximum of Rs.50,000 in each financial year.

This deduction is allowed on Interest earned on Saving/Fixed deposit-
  • Interest on bank deposits (savings or fixed)
  • Interest on deposits with a co-operative society carrying on banking business.
  • Interest on post office deposits
Tax Deduction under section 194A-
  • No TDS will be deducted under section 194-A, on interest income from Saving/FD’s/RD’s etc. from Banks, Co-operative societies engaged in banking business or post offices up to the amount of Rs. 50,000 during any financial year to resident senior citizens.
Example
  1. bank interest of Rs 10,000
  2. Interest on fixed deposits of Rs 80,000
  3. Other income of Rs 2,50,000
  4. Post office saving interest of Rs. 8,000
Answer
Taxable Income under the head of "Income from Other Sources"-
Particulars Amount (Rs.)
Saving Bank Interest 10,000
Interest on Fixed Deposits 80,000
Other Income 2,50,000
Post office Saving Interest 8,000
Total Income 3,48,000
Less: deduction Under section 80TTB 50,000
Gross Taxable Income 2,98,000
Note:-
In the above example the interest earned is Rs. 98,000 but deduction is allowed up to Rs. 50,000 under section 80TTB.

Key Difference between section 80TTA and 80TTB

A Senior Citizen can save how much amount of Income Tax after introducing section 80TTB?

Example Mr. Samir age of 65 years, having their interest income as below:-
  1. Savings interest of Rs 15,000
  2. Interest on fixed deposits of Rs 80,000
  3. Other income of Rs 2,50,000
Answer
Let’s take the above income will be same in F.Y. 2017-18 & 2018-19. Mr. Samir will save the tax amount after introducing section 80TTB. The calculation is as under-
Particulars Financial Year 2017-2018 Financial Year 2018-19
Saving Interest 15,000 15,000
FD Interest 80,000 80,000
Other Income 2,50,000 2,50,000
Gross Total Income 3,45,000 3,45,000
Less: Deduction under section 80TTA 10,000 0
Less: Deduction under section 80TTB 0 50,000
Taxable Income 3,35,000 2,95,000
Tax Including Cess 1,802.50 0
Tax Saving 0 1,802.50
Mr. Samir saves Rs. 1,802.50 in F.Y. 2018-19 as compare to F.Y. 2017-18, after introducing section 80TTB.  
See the related post : How to download Form 26AS Online



Comments

Gurbachan Singh Marwaha on 6/1/2019 3:45:40 AM says:
Can gift say from mother in law or father in law be shwn under Any other Incom.Give examples of such income. Thanks

Leave a Reply

Name *
Comments *
   

© 2019 - Understand Your Income