ITR AY23: If you are filing your income tax return under the old tax regime, you are entitled to several tax deductions and exemptions. These include claiming tax exemption of up to Rs 10,000 in income tax on interest up to Rs 10,000 earned from savings bank accounts. Let’s see how it benefits
Tax free interest up to Rs 10,000
Under Section 80TTA of the Income Tax Act, interest up to Rs 10,000 per year on a savings account remains tax free. Keep in mind that this will include interest earned on all your bank savings accounts. If the interest on all bank accounts exceeds Rs 10,000, then it will be taxed. Section 80TTA allows people below 60 years of age to claim deduction of interest up to Rs 10,000.
Who will not get this benefit
Whereas companies and firms cannot take this benefit. Only interest of Rs 10,000 received on all savings accounts in post offices, banks or co-operative banks will remain tax free. Interest above this will be taxed as per your slab.
This deduction is over and above the limit of Rs 1.50 lakh under section 80C.
Which interest will not be exempted
Interest earned on fixed deposits or RDs or any other deposits will not be exempted under this section. Apart from this, interest earned on deposits in NBFCs will also not be included in the tax benefits under section 80TTA.
ITR AY23: Who is eligible under section 80TTA?
Only tax payers or Hindu United Family (HUF) residing in India can avail tax deduction on interest. Non Resident Indians (NRIs) can avail this benefit under Section 80TTA for their Non Resident Ordinary or NRO Savings Accounts.
It should be noted that people in the age group of 60 years or more can claim tax deduction under 80 TTB for interest income up to Rs 50,000 or actual interest income, whichever is lower.