Interest earned on your savings bank account is taxable, but Section 80TTA provides a relief up to ₹10,000.
What is Section 80TTA?
Section 80TTA of the Income Tax Act allows a deduction of up to ₹10,000 on interest earned from savings accounts. This is available to Individuals and HUFs.
Eligible Accounts
The interest must be earned from a savings account with:
- A Bank
- A Co-operative Society engaged in banking
- A Post Office
Not Eligible
Interest from Fixed Deposits (FDs) or Recurring Deposits (RDs) is NOT eligible for deduction under Section 80TTA.
For Senior Citizens
Senior citizens (aged 60 years or more) cannot claim deduction under Section 80TTA. Instead, they can claim a higher deduction of up to ₹50,000 under Section 80TTB, which covers both savings and fixed deposit interest.
How to Claim
You must add your total interest income from all savings accounts to your "Income from Other Sources" while filing your ITR. Then, claim the deduction under Section 80TTA (max ₹10,000) to reduce your taxable income.
Conclusion
Many taxpayers forget to report savings interest or claim this deduction. Ensure you check your bank statements and claim this benefit to reduce your tax liability.