New Delhi. The interest received on a savings bank account is taxed which exceeds the exemption limit. It is taxed according to your tax slab. This interest amount is included as ‘income from other sources’. The important thing is that if you do not give this interest information in your ITR, then the Income Tax Department can send you a notice. As a result, you will face a fine. Therefore, it is important for you to know how much interest amount remains tax free in a year.
Interest up to Rs 10000 will be tax free
Under Section 80 TTA of the Income Tax Act, interest on savings bank account up to Rs 10,000 per year remains tax free. Keep in mind that this will include the interest received on all your bank savings accounts. If the interest of all bank accounts is more than Rs 10,000 then it will be taxed. Under Section 80 TTA, people below 60 years of age get the facility to claim deduction on interest up to Rs 10,000. People in the age group of 60 years or more can claim tax deduction up to Rs 50,000 under the 80 TTB or up to an interest income of up to Rs 50,000, whichever is less.
It is important to know these things
Savings account interest is included in income under “Income from other sources”. You will have to disclose the exempt interest income on the tax return, which will be taxed under the Relevant slab rate. According to Section 19A of the Income Tax Act, there is no TDS on savings account. As we said earlier, interest up to Rs 10,000 will be tax free.
Section 80 TTA of Income Tax Act, 1961
Only an individual or Hindu United Family (HUF) can avail tax deduction on interest. Whereas companies and firms cannot make these profits. The total interest received on all savings accounts in post offices, banks or co-operative banks will be tax free of Rs 10,000. Interest above this will be taxed according to your slab.
Section 80 TTB
Senior citizens above 60 years of age are eligible for deduction for interest up to Rs 50,000 per year under this section on savings accounts and FDs. Interest on FD is also eligible for equal deduction under this section.
No discounts will be given in this way
Interest received on time deposit, FD, RD or any other investment will not be exempt under Section 80 TTA. TDS is not deducted on interest received from bank savings accounts. Senior citizens are not covered under Section 80 TTA. On the other hand Section 80 TTB entitles senior citizens to get tax rebate on interest amount up to Rs 50,000 received from banks, post offices or co-operative banks. The financial year 2020-21 is coming to an end on 31 March. So if you want to get tax exemption, then invest in tax free before March 31.
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