Sec 80TTA - Interest on Savings A/c Deduction
Posted @ June 29, 2013, 2:12 am under (Payroll Outsourcing & Taxation)
The Finance Act 2012, introduced a new section 80TTA in the Income-tax Act, 1961. According to this section, the aggregate amount of interest earned on the savings bank account or Rs 10,000, whichever is lower, shall be allowed as a deduction against the total income of an individual or HUF in respect of the interest earned on saving bank account with a bank, post office or cooperative society as specified.
This section provides for a deduction and not an exemption i.e. first of all the total interest income earned will have to be included in the total income of the individual or HUF, and then deduction of a maximum of Rs 10,000 or actual interest earned whichever is lower, will have to be claimed as a deduction against the total income.
Please note that the deduction is not applicable to interest earned on time deposits (i.e. deposits repayable on expiry of fixed periods). The deduction under his section is applicable for AY 2013-14 onwards (i.e. FY 2012-13).