The provisions of Section 80TTA of the tax Act could also be read as under:-
Also it is noted that as per the New Income Tax Section 115 BAC introduced in Budget 2020. As per the Section 115 BAC you should give your option as you opt-in as New Tax Regime or Old Tax Regime in the newly prescribed Form 10-IE. If you choose the New Tax Regime you can not avail this exemption U/s 80 TTA or if you choose the Old Tax Regime then you can avail this Exemption U/s 80 TTA.
Exemption interest on deposits within the savings accounts as per the provisions of Section 80TTA.
Where the gross total income of an assessee (other than the assessee mentioned in section 80TTB for Senior citizens), being a private or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) during a bank account with—
1. Banking Concerned: Interest earned from a Savings Bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution mentioned in section 51 of that Act);
2. Co-operative Society: Savings Interest earned from a co-operative society (including a co-operative land mortgage bank or a co-operative exploitation bank); or
3. Post Office: Savings Interest earned from a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),
If the above conditions are satisfied the subsequent deductions are going to be allowed as per Section 80TTA:
A. during a case where the quantity of such income doesn't exceed within the aggregate Rs.10,000/- the entire of such amount; and
B. in any other case, Rs.10,000/-
Further where the income mentioned during this section springs from any deposit during a bank 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 entire income of any partner of the firm or any member of the association or any individual of the body.
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Applicability of deduction under section 80TTA?
Section 80TTA Exemption from tax on saving account interest up to an amount of Rs.10,000/- (Ten Thousand) only. So, it's considerably clear that Section 80TTA allows saving of tax on interest income earned from “Savings Accounts” only.
Thus, Section 80TTA does not allow other interest income received from Banks, financial organization’s from other deposit such as Recurring Deposits, Fixed Deposits, Company Deposits are not eligible for getting the benefits of Section 80TTA deduction.
A private or a member of HUF can claim deduction of tax on interest income up to Rs.10,000/– received from the following:
From a saving account maintained in a Bank;
From savings account maintained in a Post office;
From a saving account maintained with a Co-operative Society completing banking business.
But interest earned from Fixed Deposits, Recurring Deposits, Term Deposits maintained with Banks, financial organization’s, Co-operative Societies, Post office, are not eligible for tax deduction under this section.
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Who can claim 80TTA Deduction?
As per the provisions of Section 80TTA only individual and members of Hindu Undivided Family can claim deductions of Rs.10,000/- for interests earned on deposits held within the savings accounts only.
Further, it should be kept in mind that 80TTA deduction is allowed for a maximum amount of Rs.10,000 for interest income earned from all the bank account altogether maintained in the name of the assesses.
Is 80TTA applicable for non residents?
As per Section 80TTA, there are not any restrictions on Non-residents to say tax exemption on interest income earned from bank account . However, the utmost amount of deduction is restricted to Rs.10,000 only combining all bank account together.
Can we claim both 80TTA and 80TTB?
The answer is simply No. U/s 80TTB is applicable only for the Senior Citizens only. As per Section 80TTB, a senior citizen is allowed to claim deduction Under Section 80TTB up to a maximum amount of Rs.50,000 in a year,
So, in simple words, the tax Act doesn't allow one to availed exemption of both under Section 80TTA and 80TTB respectively. Senior citizens claiming deduction only U/S 80TTB can't enjoy the advantages given under section 80TTA.
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