Yes, Indian taxpayers can legally reduce or avoid tax on savings account interest under Section 80TTA and 80TTB of the Income Tax Act. Let me show you how to avoid tax on savings account interest?
Section 80TTA (For Individuals Below 60)
Deduction Limit: Up to Rs. 10,000/year on interest from savings accounts (across all banks).
Applicability: Covers savings accounts in banks, co-operative societies, and post offices.
Excess Interest: Amounts above Rs. 10,000 are taxable under "Income from Other Sources."
Section 80TTB (For Senior Citizens Aged 60+)
Higher Deduction: Up to Rs. 50,000/year on interest from savings accounts, FDs, or recurring deposits.
Exclusivity: Only for seniors; others cannot claim this benefit.
Try to distribute savings to keep interest below taxable thresholds and split deposits to utilize dual deductions (if both earn interest). Shift your excess funds to PPF, Sukanya Samriddhi Yojana (SSY), or tax-free bonds.
Banks deduct 10% TDS if interest exceeds Rs. 40,000/year (Rs. 50,000 for seniors). Submit Form 15G/15H (if eligible) to avoid TDS.
Example: If you earn Rs. 12,000 in savings interest, only Rs. 2,000 (Rs. 12,000 – Rs. 10,000) is taxable.
This is how to avoid paying tax on savings interest.
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How to Avoid Paying Tax on Savings Interest?
- Tax-saving investment choices such as,
- Tax-saving fixed deposits
- PPF (Public Provident Fund)
- NSC (National Savings Certificate)
- Tax-saving mutual funds
How to Avoid Tax on Savings Account Interest?
Pritam
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2024-06-26T16:27:11+00:00 2024-06-26T16:27:12+00:00Comment
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