Section 80TTB: Deductions for senior citizens under Income Tax Act
A large number of senior citizens in India invest their savings in fixed deposits in banks or post office to earn fixed interest income. This interest income helps them stand at their own in their retirement phase and fulfil their daily necessities. However, interest income on bank or post office deposits is taxable under Income Tax Act, 1961. So, to give relief to such senior citizens and reducing their tax burden, Section 80TTB was introduced by Finance Bill, 2018 to allow deductions towards interest income on deposits earned by senior citizens. It is also well known that section 80TTA is already there for allowing deductions of upto Rs. 10,000 from interest income on saving bank deposits to all the taxpayers. Section 80TTB provides accelerated benefits to senior citizen taxpayers in comparison to section 80TTA. In this article, we will discuss intricacies of section 80TTB and answer all the questions of the taxpayers in relation to this section.
From when section 80TTB is applicable?
Section 80TTB has been introduced by Finance Bill 2018 to be effective from 1st April, 2018. It means that the senior citizens can claim benefit under section 80TTB w.e.f. F.Y. 2018-19 (A.Y. 2019-20).
Who is ‘senior citizen’ for the purpose of section 80TTB?
Section 80TTB defines ‘senior citizen’ as: Individual resident in India who is of the age of 60 years or more at any time during the relevant previous year. Thus, for being a senior citizen, the taxpayer should be:
- An Individual taxpayer
- Resident in India (in terms of Income Tax Act)
- Age 60 years or more at any time during the year
Who is eligible for claiming deduction under section 80TTB?
Only senior citizens are eligible to claim deduction under section 80TTB. We have already discussed the definition of ‘senior citizen’ in the previous question. So, we can interpret that for claiming deduction under section 80TTB, following shall be the eligibility of the taxpayers:
- He/ She should be an individual
- He/ She should be Resident Indian
- His/ Her age should be 60 years or more at any time during the year
Is deduction under section 80TTB available to NRIs?
NRIs are not eligible to claim deduction under section 80TTB of the Income Tax Act, 1961. However, they are still eligible to claim deduction under section 80TTA to the extent of Rs. 10,000.
Who are not eligible to claim deduction under section 80TTB?
Following categories of taxpayers are not eligible to claim deduction under section 80TTB:
- Non-Resident Indians
- Hindu Undivided Family (HUF)
- Partnership firms or LLP
- Companies
- Association of Persons or Body of Individuals
Which incomes are eligible for deduction under section 80TTB?
Any interest income earned by a senior citizen on deposits is allowable as a deduction under section 80TTB in case the deposits are held with:
- A Bank or banking company
- Co-operative society engaged in carrying on banking business (including co-operative land development bank or co-operative land mortgage bank)
- Post Office
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Deposits here includes saving deposits, recurring deposits as well as fixed deposits. It will also include any other deposits like Senior Citizen Savings Scheme, Post Office Monthly Income Scheme etc. in post office or bank. However, interest income on corporate bonds/ deposits/ debentures or interest on deposits from NBFCs are not eligible for deduction under section 80TTB. |
What is the maximum amount of deduction under section 80TTB?
- The maximum amount of deduction available under section 80TTB is Rs. 50,000
- Therefore, any senior citizen can claim deduction in respect of interest on deposits to the extent of Rs. 50,000.
- But if actual interest income on deposits is less than Rs. 50,000, then deduction shall be restricted to such actual interest income.
- Suppose, interest income is Rs. 60,000 then deduction shall be allowed for Rs. 50,000. But if interest income is Rs. 35,000, then deduction shall be Rs. 35,000.
Can a taxpayer claim deduction under section 80TTA as well as 80TTB?
No, a senior citizen who claims deduction under section 80TTB is not entitled to claim deduction under section 80TTA.
What is the difference between section 80TTA and section 80TTB?
You must be curious to find out the difference between the two sections 80TTA and 80TTB. We have already discussed above that section 80TTB provides accelerated deduction to the senior citizen taxpayers as compared to section 80TTA. The differences between the two sections are as below:
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Section 80TTA |
Section 80TTB |
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Individual and Hindu Undivided Family (other than senior citizens) can claim deduction u/s 80TTA. |
Only a senior citizen individual can claim deduction u/s 80TTB. |
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Both Resident as well as Non-resident can claim deduction u/s 80TTA. |
Only a Resident senior citizen can claim deduction u/s 80TTB. |
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Deduction u/s 80TTA is available in respect of interest on saving deposits with banks/ co-operative societies/ post office. |
Deduction u/s 80TTB is available in respect of interest on saving deposits as well as fixed/ recurring deposits with banks/ co-operative societies/ post office. |
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Maximum deduction under this section is Rs. 10,000. |
Maximum deduction under this section is Rs. 50,000. |
Is deduction u/s 80TTB is over and above deduction available under section 80C?
Yes, deduction under section 80TTB is in addition to deduction available under section 80C. It means that you can claim deduction u/s 80C up to Rs. 1,50,000 as well as deduction u/s 80TTB up to Rs. 50,000.
Also Read: Deduction under section 80TTA
