Is saving account interest is taxable?
With effect from assessment year 2013-2014,a new section 80TTA hasbeen introduced for providing deduction for interest income.sec. 80TTA provides that, any interest income derived from deposits in a savings account (not time deposits) will be allowed as deduction. Interest income up to Rs 10,000 in aggregate shall be allowed as deduction while computing Total Income. Only individuals and HUF are entitled to claim deduction u/s 80TTA.
Further, such savings account should be maintained with a banking company to which Banking Regulation Act, 1949, applies or in a co-operative society engaged in the business of banking or in a post office.
However, where the aforesaid income is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed in respect of such income in computing the total income of any partner of the firm or any member of the association of persons or body of individuals.