- Section 80TTA allows a deduction for taxpayers from the interest income earned from the deposits available in a savings bank account (not being a time deposit). While Section 80TTB allows a deduction for taxpayers from the interest income earned from any bank deposits, including fixed deposits.
1. Who can claim a deduction under Section 80TTA?
- An individual or a HUF deriving income in the nature of interest on deposits in a savings account can claim a deduction under Section 80TTA. This deduction is available to every individual or HUF, irrespective of their residential status.
2. Who cannot claim a deduction under Section 80TTA?
- A deduction under this provision is not available to any person other than an Individual or HUF. Where interest income is derived in respect of the saving account held by or on behalf of a firm, AOP, or BOI, no deduction shall be allowed to the partner or member of such firm, AOP, or BOI, as the case may be.
3. Which income is eligible for deduction under Section 80TTA?
- An individual or HUF is eligible to claim a deduction under this provision in respect of interest on deposits in a savings account held with the following:
- a) A banking company, including any bank or banking institution;
- b) A co-operative society engaged in banking business (including co-operative land mortgage bank or co-operative land development bank); or
- c) A post office.
4. How much deduction can be claimed under Section 80TTA?
- The assessee can claim a deduction of an amount equal to the interest credited to his savings account or Rs. 10,000, whichever is lower.
5. How much deduction can be claimed under Section 80TTB?
- The assessee can claim a deduction of up to RS 50,000 from the interest income earned from any bank deposits, including fixed deposit.
- EXAMPLE:-
- Mr. A has an interest income of Rs. 6,000 from his Savings Account. And Interest on his FD is Rs. 9,000, the Interest earned on RD is Rs. 6,000, and the Interest earned on a loan given to a friend is Rs. 5,000.
If Mr. A's age is 58 yrs
In this case, Mr. A can claim a deduction of Rs.6,000/-. Because as per Section 80TTA he can claim a deduction only on his Savings Account interest and that too Maximum of Rs.10,000.
If Mr. A's age is 63yrs
In this case, Mr. A is a Senior citizen. As per Section 80TTB, Mr. A can claim a deduction on both time deposits and savings deposits. The maximum deduction allowed under this section is Rs. 50,000. Therefore, Mr. A can avail a deduction of Rs.21,000 only. He cannot avail any deduction on interest income from private loans.
