About: Section 80TTA provides deduction on interest income from savings bank account to individuals and HUF.
Deduction u/s 80TTA: Any individual, being a resident or a Non-Resident Indian (NRI) or a Hindu Undivided Family (HUF) having interest income on deposits in savings bank account in India is entitled to a deduction u/s 80TTA up to a maximum of Rs. 10,000/- during a financial year.
Conditions for Claiming the Benefit:
- This deduction is allowed on the interest earned from:
- a savings account with bank
- a co-operative society carrying on the business of banking
- a savings account with a post office
- The interest income must be from a deposit other than fixed deposit, time deposit or recurring deposit.
- The deposits must be held in the name of the taxpayer.
- The quantum of deduction will be lower of the following:
- Interest earned (during the relevant financial year)
- Maximum deduction of Rs. 10,000/-
Deduction under section 80TTA for Non-Resident Indian (NRI): Non-Resident Indians (NRIs) are also eligible to get the deduction u/s 80TTA on the interest earned on savings bank accounts in India subject to a maximum limit of Rs. 10,000 in a financial year. It is clearly mentioned in the act that individuals and HUF are eligible to get the deduction u/s 80TTA which means a NRI is also eligible to get this deduction.
NRO Savings Account: When a person resident of India leaves India for any other country for taking up employment or for carrying on any business or for any other purpose indicating his intention to stay outside India for an uncertain period, his existing account should be designated as a Non-Resident (Ordinary) account (NRO account). Thus, normal saving accounts of Non-Resident Indians (NRIs) are designated to Non Resident Ordinary (NRO) savings account and hence, the deduction u/s 80TTA should be eligible for NRO savings accounts as well.
Conditions:
- Non Resident Ordinary (NRO) accounts could be of any type such as savings, current, recurring or fixed deposit. It must be kept in mind that deduction u/s 80TTA is allowed only on NRO savings account.
- Interest earned from NRE account is not eligible for deduction u/s 80TTA as interest earned from NRE accounts are exempt from tax.