Query 1]

1.      I am a retired person. I am managing my lively hood, with interest amounts received from the FDs (Rs. 50 Lacs in Bank) and Senior citizen deposit account schemes (Rs. 15 Lacs in Post Office). I want to know, whether Section 80 TTA provides any exemption of Tax on the interest earned? I have been depositing tax against the interests earned every year, since FY 2009-10. [apnmazumdar@rediffmail.com]

2.      Interest on Saving-Bank account is exempt up to Rs.10,000/-. Earlier Postal saving-bank interest was also exempt up to Rs.7000/-. Please clarify, whether both the exemptions are allowed or higher Limit is inclusive of both Bank & Post? [shantukumarved@gmail.com]


  1. Section 80 TTA offers deduction to a taxpayer (being an individual or HUF) against any income by way of interest on deposits (not being time deposits) in a saving account with:
    banking company;
    b. cooperative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank);or
    c. Post office.
    The deduction admissible shall be interest received or Rs. 10,000/- whichever is lower. The deduction towards interest on all saving bank accounts taken together cannot exceed Rs. 10,000/-. Deduction is not admissible against interest on FD/ Senior Citizen Deposit Account scheme.
  2. It may be noted that exemption towards interest on saving account with post office is also available under section 10(15)(i) by virtue of Notification No .332/2011, Dated June 3,2011, read with Notification No.GSR 607, Dated June 9, 1989. However, exemption is restricted up to 3,500/- in an individual account and Rs. 7,000/- in a joint account. The cumulative impact of sections 10(15)(i) and 80TTA is that first of all, taxpayer can claim an exemption up to Rs. 3,500/- or Rs. 7,000/- u/s 10(15)(i) as mentioned above and against the balance amount, deduction u/s 80TTA could be claimed.

Query 2]

I want to open an Overdraft Account against Time Deposits and pay funds through this account to purchase a Flat and also repay Housing Loan Installments through this account. The account will be used only for this purpose only. My question is

“Whether I will be entitled to get rebate against Interest and Installments under I.T. Act?” Please satisfy my curiosity. [Ashwini Gore, Jabalpur (MP) – goreashwini@sbi.co.in]


It appears that you want to avail housing loan for purchase of flat and also want to have an overdraft account from which you would be paying the installment. The overdraft account is proposed to be used by you for paying the margin money of the house you are purchasing & also for repayment of the housing loan installment. You would be entitled for deduction towards the interest & principal repayment only in respect of housing loan only. No deduction towards the interest / principal of overdraft account would be admissible. However, if you are availing overdraft facility against FDR, you can claim interest on overdraft a/c against the interest income from FDR.


Query 3]

My daughter is studying in first year. I am depositing certain amount of money in her bank account for her better future. My question is, can she invest that amount in purchasing equity shares? If so, what would be the tax liability if she earns short term profit or long term profit out of that? Is it necessary for her to file the income tax return? [sanjayghodeswar@rediffmail.com]


  1. If your daughter is major, income from the share investment would be outside the clubbing provision and income from shares trading/investment would be treated as her own income. If her income exceeds the basic exemption limit then only income would be taxable. The short term capital gain on shares would be taxable @ 15% whereas long term capital gain on shares sold through stock exchange would be exempt from tax.
  2. Filing of income tax return is mandatory only if her income exceeds the amount of basic exemption limit. (Rs. 2 Lacs for a non senior citizen individual tax payer for the FY 2014-15).

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