DEDUCTION IN RESPECT OF INTEREST ON DEPOSITS IN SAVINGS ACCOUNTS

Claim Proper Deduction of saving bank Interest

Section  80 TTA has been inserted with effect from the assessment year 2013-14. It provides a deduction upto Rs 10000 in aggregate to an assessee(being an individual or a hindu undivided family) in respect of any income by way of interest on deposits(not being time deposits) in a saving acccount with :–

a. A banking company; 

b. A cooperative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank);or

c. A Post office.

However , where the aforesaid income 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.

*Post office savings bank interest exemption under section 10(15)(i)- Post office savings bank interest is exempt  up to Rs 3500 (in an individual account)and Rs 7000(in an joint account) under section 10(15)(i) by virtue of Notification No .332/2011,dated June 3,2011,read with Notification No.GSR 607 ,dated June 9, 1989.

The cumulative impact of sections 10(15)(i) and 80TTA is as follows-

	Up to the assessment year 2011-12 Rs.	For the assessment year 2012-13 Rs	From the assessment year 2013-14 Rs
Interest on post office savings bank (exemption under section 10(15)(i)	Full Exemption , nothing is taxable.	Exemption up to Rs 3500 in a single account and Rs 7000 in a joint account.	Exemption up to Rs 3500 in a single account and Rs 7000 in a joint account.
Interest on savings account with a bank , cooperative bank and post office (deduction under section 80 TTA)	No Deduction	No Deduction	Deduction up to Rs 10,000