All of our salaries or payments are credited in our bank accounts and we earn a small interest of 4-6% on that account but – Did you know that the interest earned on your Savings Account is taxable? But as the government and authorities promotes small savings, there are exemptions of up to ₹10,000 on interests earned on basic savings account. under Section 80TTA.
Deductions allowed under Section 80TTA
Deduction is allowed for interests earned from a savings account with a –
- Cooperative Society involved in banking activities
- Post Office
This deduction is not restricted to just one account, you can claim deductions on multiple accounts just the total amount will not be more than ₹10,000
Deductions Not Allowed Under Section 80TTA
Deductions are not allowed on interest earned from timed deposits. It will not be allowed for interest earned from –
- Fixed Deposits
- Recurring Deposits
- Other sorts of Timed Deposits
Interest Rates in Banking
Earlier the maximum allowed interest on a Savings Bank Account was 4% but now the Reserve Bank of India(RBI) allows banks to fix higher interest rates. And the interest is now calculated on the daily balance. All of this helps you to get more interest earned on your savings bank account.
To keep a tab on your interest earned, you can upload all your bank statements to Sorted AI which makes organizing documents seamless and automatic.
Gaurav heads Growth & Marketing at Sorted AI. He is an IIT Kanpur Alumnus. He has more than 5 years of work experience in Entrepreneurship & Investment Banking where he worked with Credit Suisse & Tapp Me. He is an avid Keyboard/Percussion Player & a better discount hunter.