Your interest on savings account is taxable

Do you know that interest income you derive from your savings account is actually taxable? If not, we tell you about Section 80TTA in the IT Act that will guide you how to claim interest income on your savings account.

Savings account is the most traditional form of investment in banking and other form of financial system, as it provides guaranteed return and security.

Income arising from other sources which also involves savings account interest income are taxable as per income tax slab rates applicable to the investors.

Since the government has always motivated citizen in making small savings, basic savings account also provide tax benefits.

For claiming those tax benefits, Section 80TTA plays a key role.

Under IT Act, Section 80TTA is titled as ‘Deduction in respect of interest on deposits in savings account’.

According to BankBazaar, here’s a list of salient features of this section.

•     You can claim exemption on up to Rs 10,000 received as interest on your savings account deposits.
•     The savings account can be held in any of the following financial institution:
•     Bank
•     Cooperative society
•     Post office
•     You can claim exemption on any number of savings accounts as long as the total amount you are seeking exemption on is less than Rs 10,000.

It may be noted that Section 80TTA can be applied only in case of savings accounts and not on term deposits, fixed deposits or recurring deposits.

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