Can Interest on deposits in saving account (u/s 80TTA) be claimed for tax rebate?

POSTED BY dipak kalola ON April 16, 2013 11:09 am COMMENTS (6)

Hi Friends,

today when i was visiting http://law.incometaxindia.gov.in/DIT/Xtras/taxcalc.aspx , i was surprised to see that under deduction part, there is Interest on deposits in saving account (u/s 80TTA) .

 if interest from saving a/c is more than 10000k, it is taxable. but if it is less then?

which interest on deposits? plz clear my confusion.

thanks…

deepak

6 replies on this article “Can Interest on deposits in saving account (u/s 80TTA) be claimed for tax rebate?”

  1. bemoneyaware says:

    Savings Bank Account is the most common account for individuals. When you have money in bank savings account, your money earns interest.
    Interest earned on Saving Account is considered as Income from other Sources. This needs to be declared in your income tax returns. No TDS is deducted from the interest on Saving Bank Account. Before 1st Apr 2012 it was taxed based on your income slabs.

    From FY 2012-13 under the new section 80 TTA of the Income-tax Act, deduction up to an extent of Rs 10,00 in interest from all the bank accounts is allowed to an individual or Hindu undivided family, Interest over Rs 10,000 will be taxed at marginal tax rate of an individual. This is applicable from the assessment year 2013-14(Financial Year 2012-13) and subsequent assessment years.
    Our article Interest on Saving Bank account discusses it in detail.

  2. Mohan says:

    Dear Ashal,
    Is any document should be produced with the filed ITR for availing this tax exemption

    1. bemoneyaware says:

      No document has to provided. ITR is now annexure less

  3. Dear Pattu, for MODs or sweeping FDs, the person in question should contact the branch to get the break up of SB interest & FD interest. Automatic break up, I doubt is available.

    thanks

    Ashal

  4. Dear Deepak, interest earned from any instrument is taxable. Here any instrument includes Saving Bank Account Interest also. So even if you were earning merely 2000 or 2500 Rs. in all your SB accounts taken together, the same was taxable till the introduction of 80TTA from 1st April 2012. Under section 80TTA, only SB account interest is tax exempted upto the limit of 10000 Rs. Now for example, if you earn 12000 Rs. from your SB acct. in FY 2012-2013, only 2000 Rs. is taxable.

    Now if you are running sweeping FDs & there is income generation of say 8000 Rs. from these sweeping FDs & 2000 Rs. from regular SB acct. in this case only 2000 Rs. from SB acct. ‘ll be eligible for 80TTA benefit & the 8000 Rs. interest earned from sweeping FDs (also called MODs) ‘ll be taxed as per regular income slab.

    Thanks

    Ashal

    1. Ashal,

      For sweep accounts will this break be available readily? Or should one keep track?

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