Taxes play an important role in the development of the country. As people grow older, they often face multiple health challenges, both physical and mental. Remember that these issues can lead to significant financial strain on senior citizens as medical treatments and care can be expensive. To help reduce this burden, it’s important to offer them financial relief through tax deductions.
With such an enormously growing need, the government regularly introduces new policies to make life easier for senior citizens. In the Finance Budget of 2018, several measures were taken to provide more benefits to them. One key change was the introduction of a new provision called Section 80TTB, which offers tax relief specifically for senior citizens.
What Is Section 80TTB?
Section 80TTB refers to a special tax provision designed to benefit senior citizens in India. It allows taxpayers who are resident senior citizens, aged 60 years or older, during a financial year to claim a deduction from their total income. This deduction helps lower their taxable income, which may provide financial relief.
The deduction can be claimed on the interest earned from various types of deposits, including savings accounts, fixed deposits, and recurring deposits. These deposits can be held with banks, cooperative societies, and post offices involved in banking activities. Furthermore, the provision aims to support senior citizens by reducing their tax burden on income generated from these savings.
Who Can Claim 80TTB Deduction?
Only residents aged 60 years or older are eligible to claim a deduction on the interest earned from their deposits under 80TTB. Senior citizens with savings accounts, fixed deposits, or recurring deposit accounts can deduct this interest from their income for the given financial year.
This deduction allows senior citizens to claim up to Rs. 50,000 as a deduction on the interest earned from deposits held in banks, post offices, or cooperative societies. The deduction applies to all types of interest income. Furthermore, these individuals can easily maximize their savings and reduce their tax liability by taking advantage of the benefit.
Deductions under Section 80TTB in ITR?
Section 80TTB allows senior citizens to claim a deduction on the interest earned from their deposits, with a maximum limit of Rs. 50,000. The deduction can be the total interest earned or Rs. 50,000, whichever is lower.
If the interest earned on deposits is less than Rs. 50,000, the entire interest amount can be claimed as a deduction.
If the interest exceeds Rs. 50,000, then the maximum deduction allowed is Rs. 50,000.
The following types of interest income are considered for this deduction.
- Interest earned on fixed deposits or savings bank accounts.
- Interest is earned from deposits with cooperative societies that conduct banking activities, such as cooperative banks for land development or mortgages.
- Interest from post office deposits.
Differences Between 80TTA Vs Section 80TTB
Let’s take a look at the differences between 80TTA vs. Section 80TTB based on the following parameters.
| Parameters | Section 80TTA | Section 80TTB |
| Age Limit | This Section applies to all individuals and HUFs (Hindu Undivided Families) | On the other hand, Section 80TTB is exclusively for senior citizens aged 60 years and above. |
| Types of interest income | Section 80TTA includes the interest amount that is earned from savings accounts. | On the contrary, this section enables deductions on interest income from savings, fixed, and recurring deposits. |
| Deduction Limit | Coming to the Section, it allows the maximum deduction limit under Section 80TTA to be Rs. 10,000. | The maximum deduction limit under Section 80TTB is Rs. 50,000. |
| Eligibility | Under Section 80TTA, NRI & NRO accounts are eligible for deductions under Section 80TTA of the Income Tax Act | Section 80TTB, on the flip side, deductions can be claimed only by Indian residents but do not apply to NRI accounts. |
| Claim Process | When it comes to understanding the claim process, only eligible candidates and HUFs can claim the deduction under Section 80TTA by filing their income tax returns. | On the other hand, senior citizens can claim deductions under Section 80TTB by filing their income tax returns. |
Exceptions Under Section 80TTB of the Income Tax Act
Let’s take a look at the list of individuals that are not eligible to claim tax deductions. Here are the main exceptions.
- Non-Resident Indians (NRIs)
It is the first and basic exemption under Section 80TTB, which means NRIs are not eligible for the benefit. Only resident senior citizens can claim deductions under Section 80TTB.
- Hindu Undivided Families (HUFs)
Another major exception under this section is that HUFs cannot claim this deduction. It only applies to individual senior citizens.
- Interest in Business Bonds and NCDs
Remember that interest earned from certain investments, such as business bonds or non-convertible debentures (NCDs), does not qualify for the section 80TTB deduction. Only interest from savings accounts, fixed deposits, and recurring deposits with banks, post offices, or cooperative societies can be claimed.
- Organizations Like AOPs/BOIs
Last but not least, interest earned from savings accounts held by groups like Associations of Persons (AOPs) or Bodies of Individuals (BOIs) is not eligible for deductions under Section 80TTB. Additionally, partners of firms or members of such AOPs or BOIs cannot claim this deduction when calculating their total income.
Frequently Asked Questions
Listed below are the frequently asked questions related to the Section 80TTB in income tax.
Yes, he/she can claim a deduction under Section 80TTB for both the interest from savings and fixed deposit accounts, but the maximum deduction allowed is Rs. 50,000.
You can easily claim the deduction by filing your income tax return. First, include the interest income from savings, recurring, and fixed deposits under the “Income from other sources” section, and then you claim the Section 80TTB deduction.
Yes, Section 80TTB deduction is applicable for AY 2024-25.
Yes, Section 80TTB applies to all citizens aged 60 and above, including senior citizens and super senior citizens.
No, you cannot claim both Section 80TTA and Section 80TTB deductions at the same time.
No, deductions under Section 80TTB are not available in the new tax regime.
