An individual can claim for deduction on interest income of up to Rs 10,000 per annum under this section. It is available for both individuals as well as Hindu Undivided Family.
The deduction is available on the interest amount earned:
Please Note: Income earned from fixed deposits or recurring deposits or time deposits held with any banks or financial institutions or post office is not eligible for deduction under this section.
Deductions under Section 80TTA will not be allowed for the interest earned amount on fixed deposits and it is taxable as per the normal slab rates as indicated by the Union Budget. The tax deducted at source will also be applicable if the interest earned amount exceeds Rs 10,000 per annum (The interim budget 2019 has upped the interest earned amount to Rs 40,000 per annum). As deduction for any income amount earned through fixed deposits is not allowed in the same way, the deduction under Section 80TTA cannot be claimed against the interest amount earned from recurring deposits.
Individuals and Hindu Undivided Family (HUF) are allowed to claim for deductions under this section. Others including firms, corporates, entities, artificial juridical person, the body of individuals, association of persons either domestic or foreign-based ones are not allowed to claim a deduction as per Section 80TTA.
The maximum amount of deduction available under this section stands at Rs 10,000 per annum. In the interest income is less than Rs 10,000 per annum, then the entire interest amount will be eligible for deduction. If in case, the interest amount for a year exceeds Rs 10,000 per year, then the deduction will be limited to Rs 10,000 and the remaining ones will be taxed accordingly.
One has to first add the total interest income under the head Income from Other Sources in the Income Tax Returns form. Write the deduction amount in the respective column as shown under Section 80TTA. By following the above-mentioned steps one can avail deductions under Section 80TTA.