Section 80TTB of Income Tax Act, 1961 was introduced in the Budget 2018. This provision is concerned with the deductions applicable to the interest that senior citizens earn on their savings deposits. To enjoy the deductions made available under this provision, senior citizens
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.
What is Section 80TTB?
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.
Who Can Claim Deductions Under Section 80TTB?
The tax provision of Section 80TTB states that only resident individuals who are either 60 years or more of age can claim deductions on their interest earnings. Notably, senior citizens with a deposit account like a fixed deposit account, recurring deposit accounts, and savings account can claim a deduction of the interest they accrue on their deposits in a fiscal year.
Deduction available through Section 80TTB
- Interest on bank deposits; either savings, recurring, or fixed deposits.
- Interest on deposits at the post office.
- Interest on the deposits held in co-operative society mainly engaged in the business of banking. This may include a co-operative land mortgage bank or a co-operative land development bank.
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.
Documents Needed
- Bank statements, inclusive of passbook and account statement
- PAN
- Form 16
What are the Exceptions Under Section 80TTB?
These following entities are exempted from claiming tax deductions under Section 80TTB of Income Tax Act –
- Residential individuals and HUFs other than senior citizens.
- Non-resident Indians.
- The income generated on savings accounts that are held by entities like – Associate of Persons, a body of individuals or firms.
Nonetheless, one must remember that senior citizens cannot claim deductions on interest accrued on types of deposits. Ideally, interest accrued on savings account held with a banking institution, a post office or a cooperative society can be claimed as tax deduction under this section of Income Tax Act.
In other words, the benefits extended under Section 80TTB will not be available on earnings generated through company fixed deposits, NCDs, or bonds.
Furthermore, if any senior citizen decides to choose the Alternative Tax Regime that comes under the purview of Section 115BAC, deductions under Sec 80TTB is unavailable from FY 2022-23.
Difference Between 80TTA and 80TTB
| Parameters | Section 80TTA | Section 80TTB |
| Introduced on | It is in effect from the assessment year of 2013-14. | It is in effect from the assessment year of 2019-20. |
| Beneficiary | HUFs and individuals can avail the deductions allowed under Section 80TTA. | Only senior citizens can avail the deductions made available under 80TTB. |
| Qualified sources | Only interest on savings accounts qualifies for a deduction under this section. | Deposit accounts like – savings accounts, fixed deposits and recurring deposits qualify for the deductions under this account. |
| Exemption limit | Annually the exemption limit is a maximum of Rs. 10000. | In a fiscal year, the maximum exemption limit is up to Rs. 50000. |
| Eligibility | NRI and NRO accounts are eligible for the deductions under Section 80TTA of ITA. | The deductions under Sec 80TTB do not apply to NRI accounts. |
| Claim process | Eligible entities can avail the deductions under Section 80TTA by filing income tax returns. | One can claim deductions under this tax provision by filing |
FAQs
What is Section 80TTB of the Income Tax Act?
Section 80TTB of the Income Tax Act provides tax relief to senior citizens on interest income earned from banks, post offices, and cooperative banks. It allows them to claim a deduction of up to ₹50,000 on the interest income, which is not available to other taxpayers.
Who is eligible for the benefit under Section 80TTB?
The benefit under Section 80TTB is available to resident senior citizens (aged 60 years or above) in India. This includes individuals who earn interest income from fixed deposits, savings accounts, recurring deposits, and similar financial instruments.