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 must make it a point to learn all about the eligibility, limitations, and exceptions accompanying it.
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.
The maximum deduction under Section 80TTB is the lower of these following –
For instance, if the interest accrued on deposits is less than Rs. 50000, then as per this provision, the entire interest earnings are allowed as deductions. Alternatively, in case the accrued interest exceeds Rs. 50000, entities will be eligible to claim deductions of Rs. 50000 under Section 80TTB.
These following entities are exempted from claiming tax deductions under Section 80TTB of Income Tax Act –
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.
Eligible entities can claim deductions under Section 80TTB of Income Tax Act, 1961 by simply filing their income tax returns. However, before doing so, they must include the interest income generated from different deposit account into their aggregate income in a fiscal year.
One must make it a point to disclose his/her interest earnings under “Income from Other Sources” header while filing ITR online. Subsequently, then can proceed to claim the applicable deductions under Sec 80 TTB of the Income Tax Act.
When compared to general taxpayers, senior citizens already enjoy a higher basic tax exemption limit. On top of it, Section 80TTB of Income Tax Act further facilitates greater tax savings for entities above the age of 60 years.
Example: Suppose, Mr Ravi is a senior citizen who has earned interest on these sources of earnings-
This table below helps to gain valuable insight as to how senior citizens benefit with the help of Sec 80TTB–
|Particulars||Senior Citizens (Rs.)||Normal Taxpayers (Rs)|
|Interest on savings||5000||5000|
|Interest on fixed deposit||200000||200000|
|Earnings from other sources||150000||150000|
|Deductions under 80TTA (less)||Not applicable||5000|
|Deductions under 80TTB (less)||50000||Not applicable|
|Taxation before 87A rebate||2500||5,000|
|Rebate available under section 87A||2500||2500|
|Amount of tax to be paid (inclusive of cess @4%)||NIL||2600 (2600 + 4% Cess)|
As per this example, the tax liability for senior citizens is NIL when compared to regular taxpayers as the latter has to pay Rs. 2600 as tax.
Take a look at this table below to gain valuable insight into the 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 80TTB.|
Yes, the Section 80TTB deduction is available for the fiscal year 2022-23.
By filing your income tax return, you can claim a deduction under Section 80TTB. First, put the income in your income under ‘Income from other sources,’ and then claim Section 80TTB deduction.
Yes, older citizens’ FD interest is taxable. Section 80TTB allows for a deduction for FD interest up to Rs 50,000.
To begin, while filing your income tax return, you must add the total amount of interest from all deposits under ‘Income From Other Sources.’ Second, make a claim under ‘Deductions and Total Taxable Income.’ The net amount will then be taxed.
No, section 80TTB is not a part of the section 80C deduction. Section 80TTB addresses the deduction for interest on deposits for senior citizens.