Section 80TTA and section 80TTB are the two sections of income tax which bring huge benefits in the form of tax savings.
If you are earning interest income from deposit accounts and have to pay huge taxes then these sections really bring benefits for you and help you save taxes.
These
sections of deduction provide the deduction of interest income. Both these
sections have their own provisions and conditions. So for taking the benefits
of these sections in full, you must know the conditions in the individual
sections.
In
the following we have explained in detail about the exemption limit and who is eligible
for availing deduction under section 80TTA
and sectionTTB of Income Tax Act’ 1961.
What is Section 80TTA of Income Tax Act?
Section 80TTA
provides the deduction on interest received on deposits in Saving Accounts. If
a person deposits its surplus funds in his Saving Accounts and he will receive
an interest upon it.
Interest
on deposits in a savings account will become your income and Interest will be
shown in income from other sources while calculating your total income and tax
liability.
Under section 80TTA of
Income Tax you can avail deduction for such saving account interest and can
save tax. This deduction will be given from gross total income.
Who is eligible for availing deduction under Section 80TTA?
Every
individual or HUF is eligible for availing deduction under Section 80TTA. This
deduction of interest on Saving Account will not be allowed to any firm,
company, AOP etc. Only individuals or HUF can avail the benefit of this
deduction.
What types of
deposits are eligible for availing deduction under Section 80TTA?
Deduction under Section 80TTA will
be allowed only upon interest on deposits in a Saving Account. If you are
receiving interest on fixed deposits, Recurring deposits or other time
deposits, these interests are fully taxable, No deduction will be allowed on
these interest.
Deduction
on interest of fixed deposits, Recurring deposits or time deposits is allowed
only to senior citizens under Section 80TTB (which is explained after section
80TTA).
But
in Section 80TTA individuals or HUF can take deduction for interest on Saving
Accounts. Rest all the interest on other deposits accounts is fully taxable as
a part of other sources of income.
Also Read: Section80E – Deduction of Interest Payment on Education Loan
What is the amount of deduction under Section 80TTA?
Deduction
on interest on Saving Accounts is the amount that is lower of the following
two:-
- 100% of saving interest income; or
- Rs. 10,000
Example
If
Mr. X receives interest on Saving Account during F.Y 2020-21 is Rs. 50,000 then
deduction amount is lower of the following:-
- 100% of saving interest income = Rs. 50,000 or
- Rs. 10,000
So,
Lower amount is Rs. 10,000. Deduction under Section 80TTA is allows for Rs.
10,000. In this case Rs. 50,000 becomes your other source income and you can
avail deduction only for Rs. 10,000 under Section 80TTA from gross total
income.
Maximum
deduction you can avail in this section is Rs. 10,000.
Whether the
deduction amount limit under Section 80TTA is for one bank account or all bank accounts?
Deduction
of interest on a savings account allows interest received from all your savings
Account, whether the account is in different banks.
While
calculating the deduction amount total interest received from all banks being
calculated.
It
is not like that Rs. 10,000 limit is for each bank, you have to calculate
interest of all bank accounts then check if summation is more than Rs. 10000,
then deduction allows only Rs. 10,000. If summation is less than Rs. 10,000
then interest earned can avail as deduction.
Also Read: Section 89 (1) & Form 10E for Tax Relief on Arrears of Salary
What is Section 80TTB of Income Tax act?
Section 80TTB is a
new section that was introduced in the finance budget 2018 which brings the
benefits for resident senior citizens aged 60 years and above.
As
under section 80TTA individual or HUF can avail deduction of interest on saving
Account, similarly deduction of interest also allow under section 80TTB. But
the deduction under Section 80TTB can only be available to senior citizens
having age of 60 years or more.
Here
it is noted that if the senior citizen avails deduction of interest in Section
80TTB then he cannot again allow deduction under Section 80TTA.
So
the point is “What is the difference between these two Section 80TTA and
80TTB?”.
For
this difference, you also have to understand the provisions under section 80TTB
in detail and who can avail benefit under this section.
Who is eligible for availing deduction under Section 80TTB?
Only
a person who is a resident senior citizen having age 60 years and above can
avail deduction under Section 80TTB,
No other person will be eligible for this deduction.
This
section is only for the benefit of senior citizens. This deduction will be
available from your gross total income.
What type of
interest on deposits senior citizens can avail deduction under Section 80TTB?
Under Section 80TTB,
senior citizen can avail deduction of the following type of interest on
deposits account:-
- Interest on Bank Deposits (Saving, Fixed Deposits or Recurring Deposits)
- Interest on deposits held in co-operative society which is engaged in the business of banking (including co-operative land mortgage bank or co-operative land development bank)
- Interest on post office deposits
You
have to consider the total interest from all banks while calculating the
deduction amount.
If
deposits are held by or on behalf of Firm, AOP (Association of persons) or BOI
(Body of Individuals), then deduction of 80TTB is not available to the
partner/member of such Firm, BOI, AOP.
Also Read: Section 80GG: Eligible Deduction for Rent Paid
What is the
amount of deduction allowed under Section 80TTB for senior citizens?
Section 80TTB
provides deduction of interest on all deposits accounts like saving, Fixed
Deposit, Recurring deposits, Interest on Post office deposits etc.
Amount
of deduction under Section 80TTB shall be lower of the following two:-
- 100% of Interest from deposits accounts; or
- Rs. 50,000
So
you have to take the summation of all the interest from different deposits and
check if it is more than Rs. 50,000 then maximum deduction can be taken as Rs
50,000.
If
it is less than Rs. 50,000 then the whole interest can be taken as deduction.
What is the
difference between deduction on interest under section 80TTA and section 80TTB?
|
|
Deduction
on interest under section 80TTA |
Deduction
on interest under section 80TTB |
|
Applicability |
Individual
or HUF |
Senior
Citizens having age 60 years and above |
|
Deposits
covered |
Only
Saving Account Interest |
All
types of interest on deposits like. Saving, FD, RD etc. |
|
Maximum
Limit |
Maximum
deduction allow is Rs. 10,000 |
Maximum
deduction allow is Rs. 50,000 |
Also Read: Section 44AA: Rules & Limit for Maintenance of Books of Accounts
Summary
Deduction under section 80TTA and section 80TTB of Income Tax Act allow the benefits in the form deduction of interest income. By availing deduction under these sections you can save huge tax and also it encourages the habit of savings.