Deduction on Interest on Saving Account – 80TTA

Individuals and HUFs can now claim deduction on Interest on saving account from 1st April, 2013 u/s 80TTA. Section 80TTA has been newly inserted to provide deduction in respect of interest on deposits in Savings Accounts held with Banks, Post office and Cooperative Banks. Eligible Assessee Deduction on Interest on saving account will be allowed only to Individuals and HUF’s (Hindu Undivided Family). Section 80TTA deduction shall not be allowed to any Partnership firm, Association of Persons, Company or a body of individuals. Qualifying – Saving Account Deduction in respect of Interest on saving account with any of the following will qualify:

  • Bank or banking company;
  • Co-operative Society engaged in carrying on the business of banking, including a co-operative land mortgage bank or co-operative land development bank,
  • Post office Saving Account.

Other Relevant Points Deposit in other scheme of Post office or time deposit or term deposit or fixed deposits will not be allowed. Moreover, where the interest on saving account is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed in respect of such income in computing the total income of any partner of the firm or any member of the association or body. Quantum of Deduction Deduction shall be allowed upto Rs. 10000 in aggregate. Availability Deduction will be available to an assessee, being an individual and HUF’s from 1st April, 2013. In other words, deduction on Interest on saving account will apply from financial year 2012-2013 (Assessment year 2013-2014) and subsequent years.

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