Section 80TTA is introduced with effect from April 01, 2013 and will apply from AY 2013-14 and onwards. Section is introduced to provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits (not being time deposits) in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.
It is also provided that where the income referred to in this section 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 under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
Maximum Deduction
- The deduction allowed is interest received on eligible saving accounts or Rs. 10,000 whichever is lower.
- If interest earned is more than 10,000 then balance amount will be taxable as before i.e considered as Income from Sources and taxed as per your slab rate.
- The deduction is in addition to deduction of Rs. 1.50 Lakh of section 80C of the Income Tax Act-1961.
Applicable from A.Y. 2013-14 Onwards
The section is applicable from April 01, 2012 and will apply from AY 2013-14 and onwards.
