80TTB Applicability in New Tax Regime: A Comprehensive Guide

The Indian government introduced Section 80TTB in the Union Budget of 2018 to provide tax relief to senior citizens on their interest income. This deduction is applicable to individuals aged 60 years or above who are resident citizens of India. However, the question arises whether this deduction is still available under the new tax regime introduced in the year 2020.

Applicability of Section 80TTB in New Tax Regime:

The answer is no, Section 80TTB is not applicable under the new tax regime. The new tax regime offers a simplified tax structure with lower tax rates but eliminates certain deductions and exemptions, including the deduction under Section 80TTB.

Key Points to Remember:

• Senior citizens who opt for the new tax regime cannot claim the deduction under Section 80TTB.
• The exemption for saving bank interest up to ₹3,500 is available under both the old and new tax regimes.
• Section 80TTB provides a deduction of up to ₹50,000 on interest income earned from specified sources, such as savings accounts, fixed deposits, and post office deposits.

Benefits of Section 80TTB (Old Tax Regime):

• Reduces taxable income by up to ₹50,000.
• Provides tax savings for senior citizens who rely on interest income.
• Encourages savings and financial security among the elderly population.

Alternatives to Section 80TTB in New Tax Regime:

While Section 80TTB is not available in the new tax regime, there are other tax-saving options that senior citizens can consider:

• Senior Citizen Savings Scheme (SCSS): Offers higher interest rates and tax exemption on interest earned up to ₹15,000 per year.
• Post Office Monthly Income Scheme (POMIS): Provides regular monthly income and tax exemption on interest earned up to ₹12,000 per year.
• Reverse Mortgage: Allows senior citizens to borrow against the value of their property while continuing to reside in it. Interest payments on reverse mortgages are tax-deductible.

Section 80TTB is a valuable tax deduction for senior citizens in the old tax regime. However, it is essential to note that this deduction is not available under the new tax regime. Senior citizens opting for the new tax regime should explore alternative tax-saving options to minimize their tax liability.