Section 80TTB is a provision under the Indian Income Tax Act that offers tax benefits to senior citizens on their interest income. Introduced in the Union Budget of 2018, this section aims to provide relief to senior citizens who depend on interest earned from their savings. Old age often comes with physical and mental health concerns that affect the individual’s finances. Section 80TTB of the Income Tax Act simplifies taxes for senior citizens and provides them tax relief on their post-retirement earnings.
As per the Income Tax Act, a “senior citizen” is one who is a resident individual of age 60 years or above at any time in the relevant financial year. Under this section, senior citizens can avail a deduction of upto Rs.50,000 from interest income earned on deposits during the relevant financial year. However, there are certain limitations and exceptions to this section. The following article provides detailed information on Section 80TTB and will help you navigate its clauses and conditions.
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Section 80TTB is a section that deals with the interest deduction for senior citizens. Under this section, senior citizens can claim a deduction of upto Rs.50,000 interest on income earned from various types of deposits. This section bestows the right to senior citizens to claim a deduction of Rs 50,000 on the interest income earned on deposits (saving or fixed). It is designed to help the senior citizens to maintain a decent lifestyle after the retirement phase, many of whom depend on their interest income for these expenses. Section 80TTB has certain limits and eligibility criteria that should be followed in order to gain the benefits from the same. However, there are certain limits and eligibility criteria that need to be followed to avail of section 80TTB deduction.
The amount deducted should be the amount specified below from the gross total income and it should be upto Rs 50,000. specified income is any of the following sources of income in aggregate -
One must note that the interest earned on savings accounts and fixed or recurring deposits held with the above three entities will be considered for the purpose of deduction. Moreover, there are also other interests earned with other types of offices. These include Senior Citizen Savings Scheme accounts, post office time deposits, five-year recurring deposits, and Post Office Monthly Income Schemes. These will also be eligible for deduction.
The interest incomes are usually added to the gross total income of the individual and taxed at the rates specified for the person.
The senior citizens as per the definition prescribed in the Income Tax Act, 1961 are the eligible candidates for the applicability for Section 80TTB. The following are the legitimate eligibility criteria-
It should be noted that Section 80TTB is applicable only to senior citizens who are residents of India and not NRIs (Non-resident Indians).
The Exception to section 80TTB include:
If the interest income is derived from the deposit held by or on behalf of a firm, then an Association of Persons (AOP) or a Body of Individuals (BOI), Section 80TTB deduction is not available for the partner of any such firm or any member of such an AOP or BOI while computing their total income.
To calculate your deductions under Section 80TTB of the Income Tax Act, which pertains to interest income for senior citizens, you can follow these steps:
For example:
Section 80TTB deduction is specifically available to senior citizens, aged 60 years or above. However, you need to file an ITR to claim this exemption. So make sure you file your ITR by the ITR filing deadline.
As has already been made clear, there is quite an up-gradation of benefits for the senior citizens in Section 80TTB as compared to Section 80TTA.
Now that Section 80TTB is exclusive for senior citizens, Section 80TTA is not available to senior citizens anymore. One may easily mark the following distinctions between the two sections.-
| Section 80TTA | Section 80TTB |
|---|---|
| Section 80TTA is applicable to individuals and HUFs except for senior citizens. | Section 80TTB is exclusive for senior citizens. |
| The quantum of deduction specified for Section 80TTA is up to INR 10000 | In Section 80TTB, the quantum of deduction enlarges up to INR 50000. |
| The specified type of income for the eligibility of Section 80TTA is the interest on Savings account. | Section 80TTB is more open to counting the interest income on all kinds of deposits. |
Senior citizens are not required to furnish any special documents for claiming a deduction under section 80TTB. They can claim their section 80TTB deduction by furnishing their PAN number, interest certificate, and bank statement.
Several clauses had been introduced to amend the Section 80TTA such that it became the Section 80TTB, which has been launched exclusively for senior citizens. For full benefits, one must be sure to provide their bank documents carefully, the PAN card becoming extremely important. The bank deducts TDS (Tax deducted at Source) at the rate of 10% if the PAN is provided by the depositors. If it is not provided, the rate increases to 20% resulting in loss of the depositor. Section 80TTB with being in effect from the assessment year 2019-20 has been a big relief for senior citizens.Section 80TTB is dedicated towards the senior citizens who need special attention by the government for their decreasing health and property. If you are a senior citizen, make sure to file your ITR by 31st july and claim the deductions you are eligible for. And if you find ITR filing complicated, don’t worry! You can simply connect with our tax experts who can help you with your tax filing journey to make sure you pay minimum tax and stay stress-free. Book an eCA Now!
Tax savings for the senior citizens has come off as being much simpler than before since the introduction of Section 80TTB. In fact, compared to the normal taxpayer, the senior citizen is able to have a greater saving through their interest incomes on various fixed and savings deposits.
Therefore, the total income of senior citizen is less than normal citizen by Rs.40000/- with the introduction of 80TTB if he/she opts for old tax regime.
The tax computation above is a dynamic one based on the financial year and other rebates and cess rates. Nonetheless, it becomes very noticeable on how Section 80TTB does benefit the senior citizens by a significant margin.
The tax break is advised to be used for the maximum benefit. The senior citizen must use the tax break to invest in such deposits with entities specified such that the total interest income on deposits comes to Rs 50,000 per financial year. It becomes a great saving strategy through investments since the interest income becomes tax-free for senior citizens upto Rs 50,000 . This is because the interest becomes deductible from their income before taxes are levied.
The deduction is up to Rs.50,000 in view of the interest from the deposits held by senior citizens. Senior Citizens holding the FDs, savings account at Banks, Co-operative Banks, and Post Offices, earning interest from such deposits, are eligible to have the deduction under section 80TTB.
It provide extra benefit to senior citizens in the form of deduction of up to Rs. 50000 on interest on FD etc.
Yes, it is over and above the limit of Rs 1.5 lakhs u/s 80C. the benefit under section 80TTB will only be available under the old tax regime and taxpayers opting for new tax regime cannot claim this benefit while filing ITR.
The interest received under the scheme is taxable in the hands of the depositors, Yes. Interest earned can be claimed as deduction u/s 80TTB.
