Claim deduction either under Section 80 TTA or 80 TTB, but not both

Exemption under Section 10(15)(i) can be availed in conjunction with 80 TTA or 80 TTB

Pre-filled income-tax return (ITR) forms make an assessee’s task easier as she doesn’t have to enter all the information in each and every place in the form herself. At the same time, assessees shouldn’t blindly trust the pre-filled data as it is not always error-free. If, for some reason, a person fails to report all the income earned by her from all her deposit accounts, either intentionally or otherwise, she is liable to penal provisions. The assessee can’t blame the pre-filled forms for failing to capture the correct data.  

While keeping the above point in mind, taxpayers must familiarise themselves with all the benefits available on interest incomes of various types so that they are able to minimise their tax outgo.

Section 80 TTA

A taxpayer is entitled to a deduction of up to Rs 10,000 under this section.

Both individual taxpayers and Hindu Undivided Families (HUFs) can avail of it. The interest income should be derived from a savings account with a banking company, a co-operative society engaged in banking business, a co-operative land mortgage bank, a co-operative land development bank, or a post office.  

Deepak Jain, chief executive, TaxManager.in says, “This tax deduction is not available on interest from term deposits.”

Explaining the rules for joint account holders, Moiz K. Rafique, managing partner, Privy Legal Service LLP says, “Interest accrued in a joint account is taxable equally in the hands of all the account holders.”

Section 80TTB

This tax deduction is available to senior citizens (aged 60 and above) on interest from deposits. Suresh Surana, founder, RSM India says, “This deduction is available on interest from both time deposits and savings account deposits.”

The deposits could be held with a bank, cooperative society, or post office.  

Surana adds, “The amount of deduction available is the lower of the interest income included in the gross total income, or Rs 50,000.”

Section 10(15)(i)

Not many are aware that they can avail of an additional exemption under Section 10(15)(i) of the I-T Act.

Sandeep Bajaj, managing partner, PSL Advocates & Solicitors says, “Interest received from post office savings account is exempt from tax for up to Rs 3,500 for individual accounts and Rs 7,000 for joint accounts in each financial year.”

This exemption also applies to interest income, or premium on redemption, or other payments received from notified securities, bonds, annuity certificates, savings and other certificates.

Jain says, “This exemption is applicable under both the new and the old tax regime.”

Things to keep in mind

An individual can claim deduction under either Section 80TTA or Section 80TTB, not both. However, Section 10(15)(i) benefit can be availed along with either Section 80TTA or 80TTB.

Bajaj says, “In case of individuals, the maximum exemption available is to the extent of Rs 13,500 (for individual accounts) and Rs 17,000 (for joint accounts). In the case of senior citizens, it is Rs 53,500 (for individual accounts) and Rs 57,000 (for joint accounts).”

Some interest income, such as from a post office savings account, may fall within the scope of both the sections.

Rafique says, “On interest income from post office savings accounts, interest up to Rs 3,500 is tax exempted under Section 10(15), and a taxpayer can also claim a deduction of up to Rs 10,000 under Section 80TTA. However, the same amount can’t be claimed twice at the same time.”  

Surana adds, “Tax deduction under Section 80TTA is in addition to the exemption under Section 10(15)(i) of the I-T Act. It means that effect is first given to the exemption and then to the deduction under Section 80TTA to optimise tax benefit.”

If you have Rs 10,000 interest income from a post office savings account, then you first have to claim exemption of Rs 3,500 and then the balance Rs 6,5 can be claimed as deduction under Section 80 TTA.

Points to remember about these three sections  

. To claim tax deduction under Section 80TTA, interest income must be shown under the head “income from other sources”

. To claim a tax exemption under Section 10(15)(i), interest income must be shown under the head “exempted income”

. Senior citizens who can’t seek relief under Section 80TTB can avail of Section 80TTA benefit

. Section 80TTA and 80TTB benefits don’t apply to interest on deposits held by an individual or HUF on behalf of a firm, association of persons, or body of individuals

. Those who opt for the new tax regime can’t avail of the benefits under sections 80TTA and 80TTB; Section 10(15)(i) can be availed under both old and new regimes