NEW DELHI – Finance Minister, Arun Jaitley while announcing the budget for 2020-21 has said that income tax deduction under section 80TTB and 80TTA for AY 2020-21 will remain the same as that of the previous year. Both these income tax acts were introduced by the government to inculcate the habit of saving funds among senior citizens and this step is giving fruitful results since its implementation.
What is Income Tax Deduction Under Section 80TTA and 80TTB?
According to Section 80TTA for AY 2020-21, interest earned on savings accounts in various financial institutions such as banks, post office, and co-operative societies is subject to deduction. If the amount earned on saving deposits is less than 10,000 then the entire sum can be deducted and the financial institution will not charge any income tax. However, if the total interest amount exceeds 10,000 then on the extra amount beyond 10,000, a person will be liable to pay the income tax according to the income tax slab in which he falls. However, it is to be noted that the interest earned on the time deposits such as fixed deposits and recurring deposits, there will not be any deduction under Section 80TTA.
Whereas Section 80TTB deduction for AY 2020-21 states that senior citizens will be eligible to take benefits under interest rates on all types of deposits. And section 80TTB deduction for senior citizens will be Rs. 50,000. This section came into effect from the AY 2018-19 and before this, senior citizens were only eligible for rebate under section 80TTA which only give benefits up to Rs. 10,000 only for saving deposits. Now, senior citizens will not get saving bank interest exemption AY 2020-21 under section 80TTA as there is a separate section called 80TTB available for them.
Procedure to Claim Deduction Under Section 80TTA and 80TTB
The procedure to claim section 80TTA deduction for AY 2020-21 is very simple. The first thing you need to do is to add your total interest income under the head ‘ Income from Other Sources” in your income tax return form. After completing this step, you will be able to see the net amount deducted under Section 80TTA.
It should be taken into account that for expenditures in the form of ATM charges, checkbook charges, and account handling charges, you will not be entitled to claim deduction section 80TTA for AY 2020-21. For example, your total interest income from all sources is Rs. 12,000 then you can claim a deduction of Rs. 10,000 under section 80TTA. And only Rs. 2,000 will be taxable according to your income tax slab.
Note: In Finance, FY 2019-2020 means AY 20-21.