Know how you can save tax on interest income of up to ₹17,000 in a year

 







If you are filing your tax return, don’t forget to claim these deductions and exemptions to save tax on interest income.

Most of you would know that you can claim a deduction of up to ₹10,000 on the interest earned on a savings bank account under Section 80TTA of the Income Tax Act. This is the interest earned on a savings account with a commercial bank or co-operative bank or a post office.

However, do you know that you can claim an additional exemption on the interest earned on a post office savings account up to ₹3,500 in a financial year? In case of a joint account, interest income up to ₹7,000 is tax exempt. So, if you have opened a joint savings account with your wife in the post office, both of you can claim tax exemption of ₹3,500 separately. So, in total you can save tax on interest income of up to ₹10,000 from a savings bank account and up to ₹7,000 from a post office savings joint account.

It comes under section 10(15) of the Income Tax Act. Section 10 (15) talks about the exempted incomes which are not supposed to be part of the total income of an individual.

"On interest income from post office savings accounts, you can claim a deduction of up to ₹10,000 under Section 80TTA while interest up to ₹3,500 is also tax exempted under Section 10 (15). However, the same amount can't be claimed twice at the same time," said Prakash Hegde, a Bengaluru-based chartered accountant.

But, if you have an interest income of ₹10,000 from a post office savings account, you can claim ₹3,500 under exempted income while remaining ₹6,500 can be claimed as deduction under Section 80TTA.

Also, how you will show the interest income in the income tax return (ITR) will depend on whether you are claiming it as a tax deduction or a tax exemption. “In case you are claiming it as a tax deduction under Section 80TTA, you will have to show the interest income under the head Income from other sources. While if you are claiming a tax exemption you can show the same under the head Exempted Income,"said Tarun Kumar, a Delhi-based chartered accountant.

However, from this year, it is likely that you will get all this information pre-filled in your tax forms as institutions such as banks, post offices, etc are required to send the details of the interest earned by the individuals to the tax department.



Join Our Telegram Channel for more updates:https://t.me/praveengst









Comments

Post a Comment

Popular posts from this blog

Centre appeals against ruling on levy of GST on maintenance charges to resident welfare associations

Image
  The Centre has preferred a writ appeal before the Madras High Court against a single judge's order that flat or villa owners paying more than ₹7,500 a month towards maintenance charges to their residents’ welfare associations must pay Goods and Services Tax (GST) at the rate of 18% only for the amount exceeding ₹7,500 and not for the entire monthly contribution. Justices T.S. Sivagnanam and Sathi Kumar Sukumara Kurup on Wednesday allowed an application filed by the Centre to dispense with production of a certified copy of the judgment passed by Justice Anita Sumanth recently and directed the Registry to list the appeal for admission in the usual course. Justice Sumanth had in July this year quashed an order passed by the Authority for Advance Ruling (AAR) on June 21, 2019 as well as a consequent circular issued by the Department of Revenue under the Union Finance Ministry on July 22, 2019 since both of them had insisted upon collecting GST for entire monthly contribution. The jud...
Read more

Seven key things to know before filing income tax return (ITR) for FY21

Image
  The last date to file income tax return for the financial year 2020-21 has been extended to September 30, 2021. Although there is more than two months left for the deadline to end, it is always recommended to complete the task as soon as possible and not to wait for the last minute. Worth mentioning here is that the income tax department last month launched a new e-filing portal (www.incometax.gov.in) to speed up the processing of tax returns. The I-T department will soon launch a mobile application, having all the features of the new portal. This year taxpayers have to take care of the following changes in the ITR filing process. 1) A new utility named JSON has been launched for filing tax return forms for FY21. At present, only three forms, ITR 1, 2 and 4 have been released. These new forms will import pre-fill data such as personal details, salary income, dividend income, interest income, capital gains and all the information available in Form 26AS. 2) Taxpayers will have the ...
Read more

Income Tax Dept detects ₹350 cr unaccounted cash receipts after raid in Rajkot

Image
  The Income Tax Department carried out a search and seizure operation on a real estate group based in Gujarat's Rajkot and found unaccounted cash receipts in various projects of approximately ₹350 crore, the Finance Ministry said on Friday. The group is among Gujarat’s prominent real estate builders and developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the search operation. During the course of operation, many incriminating documents and digital evidences were seized indicating involvement of the group in unaccounted transactions. The IT sleuths found substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately ₹350 crore...
Read more