Section 80TTB Deduction
Vide Budget 2018, new section 80 TTB deduction, has been introduced under the Income Tax Act, 1961 in lieu of Section 80TTA deduction. Under section 80TTB deduction, senior citizens can claim income tax exemption of upto Rs. 50,000/- on interest income earned. Introduction of section 80 TTB is a special bonanza to senior citizens who mostly are dependent on interest income for their post-retirement expense.
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Eligibility for Section 80 TTB Deduction
Section 80 TTB Deduction of the Income Tax Act, 1961 is available only to the senior citizens who are a resident of India. Under the Income Tax Act, senior citizens has been defined as an individual who attains the age of 60 years at any time during the financial year.
Non-senior citizens and HUFs are not eligible to avail deduction under section 80 TTB. Also, if the interest income is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals by a Senior Citizen, the deduction under Section 80 TTB will not be applicable.
Amount of Deduction under Section 80 TTB
Deduction of maximum INR 50,000/- is available on income earned from interest on bank saving deposits, fixed / recurring deposits, interest earned on deposit with co-operative society involved in banking and deposits in post office. Once deduction is claimed under section 80 TTB, provisions of section 80 TTA would not be applicable to senior citizens.
Provisions of section 80 TTB is effective from 1st April, 2018 i.e. deduction is available to the senior citizens from financial year 2018-2019.
Additionally, in case of senior citizens, the threshold limit of Tax Deduction at Source (TDS) on interest income has been raised from INR 10,000 to INR 50,000.
Section 80 TTB vs Section 80TTA
Section 80TTB deduction will replace Section 80TTA deduction from 1st April 2018. The difference between 80TTA and 80TTB deduction is as follows:
|Particulars||Section 80TTA||Sectin 80TTB|
|Deduction on interest income of Senior Citizens||Maximum deduction of upto Rs.10000/- for saving account interest||Maximum deduction of upto Rs.50,000/- for fixed deposits and saving interest|
Section 80 TTB of the Income Tax Act
80TTB. (1) Where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with—
(a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
(c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),
there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction—
(i) in a case where the amount of such income does not exceed in the aggregate fifty thousand rupees, the whole of such amount; and
(ii) in any other case, fifty thousand rupees.
(2) Where the income referred to in sub-section (1) is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
Explanation.—For the purposes of this section, “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.