web analytics

We know that

Interest Income on Savings Bank Account is treated as Income from Other Sources (IOS)

However, deduction for the same is allowed upto Maximum of 10000 under Section 80TTA

 

Example 1

Suppose a person has Savngs Bank Interest of Rs 14000

-a-

In this case,

whole 14000 is Income from Other Sources and 

and Section 80TTA Deduction is 10000 

-ea-

 Example 2

Suppose a person has Savngs Bank Interest of Rs 4000

-a-

In this case,

whole 4000 is Income from Other Sources and 

and Section 80TTA Deduction is 4000 

-ea- 

Interest Earned on Both Savings and FD

Total Interest Earned whether FD or Savings is Income from Other Sources

80TTA Deduction is only for Interest on Savings Max 10000

Q1 Calculate Gross Total Income,Deductions and Net total Income in following Cases

Particulars Case 1 Case 2 Case 3 Case 4
Income from Salaries 300000 300000 300000 300000
         
I nterest Income        
On FD 3000 13000 30000 0
On Savings 2000 12000 0 40000
Total 5000 25000 30000 40000

-a-

 

 

Particulars Case 1 Case 2 Case 3 Case 4
Income from Salaries 300000 300000 300000 300000
Income from Other Sources 5000 25000 30000 40000
Gross Total Income 305000 325000 330000 340000
Less        
Deductions u/s Chapter VI-A        
80TTA 2000 10000 0 10000
         
Net Total Income 303000 315000 330000 330000

Tax will be imposed on this Net Total Income

 -ea-

 

Other Points

(1) This deduction available to Individual / HUF. (Both Resident and Non Resident)

(2) Following Interest Income covered

  • Savings A/c in a bank
  • Saving A/c in a cooperative bank
  • Post office saving A/c

(3) This deduction not available for following

  • Interest on Fixed Deposits
  • Assessee Other Than Individual / HUF (e.g., Not Available to Partnership Firm /Company Etc.)
  • Saving A/c held by AOP/BOI/Firms. Its Partners/Members Cannot Claim Deduction Under this Section.

 

  1. Income Tax
  2. Deductions Under Chapter VIA
Ask Download

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
Jail