Section 80TTB, introduced in the Union Budget of 2018, is a provision under the Indian Income Tax Act that offers tax benefits to senior citizens on their interest income. This section aims to provide relief to senior citizens who depend on interest earned from their savings.
Eligibility Criteria
To be eligible for the deduction under Section 80TTB, an individual must meet the following criteria:
- Resident senior citizen of India
- Age 60 years or above at any time during the relevant financial year
Specified Income
The deduction under Section 80TTB is available on the following specified income:
- Interest on bank deposits (savings, recurring, or fixed)
- Interest on deposits at the post office
- Interest on deposits held in a co-operative society engaged in the business of banking, including a co-operative land mortgage bank or a co-operative land development bank
Quantum of Deduction
The maximum deduction available under Section 80TTB is Rs. 50,000. However, if the total interest income is less than Rs. 50,000, the actual interest income can be claimed as a deduction.
Comparison with Section 80TTA
Section 80TTA provides deductions similar to Section 80TTB. However, it offers interest deductions up to Rs. 10,000 only on a savings account (held in a bank, co-operative bank, or a post office) and only for taxpayers below the age of 60 years or to a Hindu Undivided Family (HUF).
With the introduction of Section 80TTB exclusively for senior citizens, deduction under Section 80TTA is not available to senior citizens.
| Particulars | Section 80TTA | Section 80TTB |
|---|---|---|
| Applicability | Individuals and HUF except for senior citizens | Senior citizens |
| Specified income | Interest on savings account only | Interest on all kinds of deposits |
| Quantum of deduction | Up to Rs. 10,000 | Up to Rs. 50,000 |
Illustration
Let us consider the following incomes for a taxpayer:
- Savings interest of Rs. 5,000
- Interest on fixed deposits of Rs. 2,00,000
- Other income of Rs. 1,50,000
Computation of Taxable Income
| Particulars | Non-Senior Citizen (Rs) | Senior Citizen (Rs) |
|---|---|---|
| Savings interest | 5,000 | 5,000 |
| FD interest | 2,00,000 | 2,00,000 |
| Other income | 1,50,000 | 1,50,000 |
| Gross total income | 3,55,000 | 3,55,000 |
| Less: Deduction under Section 80TTA | 5,000 | Not Applicable |
| Less: Deduction under Section 80TTB | Not Applicable | 50,000 |
| Taxable income | 3,50,000 | 3,05,000 |
In the above example, a non-senior citizen can claim only a savings interest deduction of Rs. 5,000 under Section 80TTA. Whereas a senior citizen can claim savings interest and fixed deposits interest deduction restricted up to Rs. 50,000.
Documents Required
There are no special requirements while availing deduction under Section 80TTB. Your PAN, Interest certificate and bank statement is sufficient for tax computation.
Section 80TTB is introduced exclusively for senior citizens by amending Section 80TTA. It provides significant tax relief to Senior citizens who primarily invest securely in bank deposits and earn income from interest on such deposits. However, any interest received from other sources, such as interest on bonds and debentures will be ineligible for the deduction under this Section.
Frequently Asked Questions
Q: How can senior citizens save more through Section 80TTB?
A: 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.
Q: What is the amount of deduction under section 80TTB for the FY 2021-22 and FY 2022-23?
A: 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.
Q: What are the benefits of Section 80TTB of Income Tax Act?
A: It provide extra benefit to senior citizens in the form of deduction of up to Rs. 50000 on interest on FD etc.
Q: Is deduction of interest income from deposit up to Rs.50,000/- under section 80TTB available to senior citizens is over and above deduction up to Rs.1,50,000 available under section 80C
A: Yes, the senior citizen is eligible for the deduction on interest income under Section 80TTB and deduction u/s 80C and other deductions only if he files returns under the old regime by exercising the option of shifting out of the tax regime provided under Section 115BAC(1A).
Section 80TTA and Section 80TTB | Deduction Section 80TTA and Section 80TTB | 80TTB Deduction #80ttb
FAQ
What is covered under Section 80TTB?
What is difference between 80TTA and 80TTB?
What is the limit of Section 80D?
What is the deduction for 80DD?
What is section 80ttb?
Section 80TTB is a provision whereby a taxpayer who is a resident senior citizen, aged 60 years and above at any time during a Financial Year (FY), can claim a specified amount as a deduction from his gross total income for that FY. This Section is applicable w.e.f. 1st April 2018.
Does section 80ttb include FD interest?
Ans: Section 80TTB of the Income Tax Act provides a deduction to a senior citizen in respect of interest income earned on deposits with a bank or a co-operative society or a post office. The maximum amount of deduction available in INR 50,000. 2. Does 80TTB include FD interest? Ans: Yes, section 80TTB includes FD interest.
What is a senior citizen tax deduction under section 80ttb?
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.
Does section 80ttb apply to seniors?
A: Yes, Section 80TTB applies to citizens above 60 years of age, including both senior citizens and super senior citizens. Section 80TTB provides a significant deduction for senior citizens, helping them save on taxes and ease their financial burden.