21 January 2017
I am little bit confused in section 80TTA : Deduction in respect of interest on Deposits in savings account.
A person who is govt. employee and believe in savings, where the gross total income, being an individual, includes any income by way of interest on deposits (not being time deposits) in a saving account with a banking , cooperative society and a post office.
So, my query is
Say he had an balance of Rs. 3,00,000 on April 1 in Saving A/c of SBI Bank. He received a salary during current year of Rs. 4,00,000. This resulted in his account balance on March 31 : Rs. 7,00,000.
So, the total interest earned @ 4 % is 28,000.
And As per 80 TTA deduction 10,000 shall be available on interest earned.
Therefore, 18,000 includes in Income of Other Source.
Similarly, Same on next year balance of Rs. 7,00,000 on April 1 again taxed with the next year salary of person.
This show cascading effect of same amount of interest income taxed again and again over years and years.
If Above is true, then person is maintain only 2,50,000 balance in his account forever and the rest is spent on buying waste products.
21 January 2017
Dear Tarun,
I like the way your imagination works!
Unfortunately that isn't true. It's not the amount that is taxed but the income earned by the amount every year. so any income earned in next year is over and above the income earned in previous year. also sec 80tta is a deduction. before introduction is sec 80tta and its applicability, all the income earned from interest in savings was taxable. So assuming your 'person' plans his savings as per section 80tta, did he not save anything just because it was taxable? sounds strange...
CAclubindia
