Section 80TTB is a relatively new tax-saving scheme introduced by the Indian government in the Union Budget of 2018. The section offers a deduction on the interest income earned by senior citizens on their savings accounts, fixed deposits, and other fixed-income instruments. In this blog, we will discuss Section 80TTB in detail.
Who is eligible for Section 80TTB?
The section is applicable only to senior citizens who are 60 years or older. The deduction is available on the interest income earned on savings accounts, fixed deposits, recurring deposits, and other fixed-income instruments. The maximum deduction available under Section 80TTB is Rs. 50,000.
What types of interest income are eligible for deduction under Section 80TTB?
The following types of interest income are eligible for deduction under Section 80TTB:
- Interest income earned on a savings account held with a bank or post office.
- Interest income earned on fixed deposits and recurring deposits held with a bank or post office.
- Interest income earned on Senior Citizen Saving Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVVY), and other similar schemes.
- It is important to note that the deduction under Section 80TTB is available only on the interest income earned by senior citizens and not on the principal amount invested.
What are the conditions for claiming deduction under Section 80TTB?
To claim a deduction under Section 80TTB, the following conditions must be fulfilled:
- The taxpayer should be a senior citizen.
- The interest income should be earned on savings accounts, fixed deposits, recurring deposits, or other fixed-income instruments.
- The maximum deduction that can be claimed under Section 80TTB is Rs. 50,000.
- The taxpayer should furnish a declaration to the bank or post office where the account is held, stating that the interest income earned during the financial year is less than Rs. 50,000.
What are the exceptions to Section 80TTB?
It should be noted that Section 80TTB is applicable only to senior citizens who are residents of India and not NRIs (Non-resident Indians).
The Exception to section 80TTB include:
- Non-senior citizens and HUFs.
- If the interest income is derived from the deposit held by, or on behalf of a firm, an Association of Persons (AOP) or a Body of Individuals (BOI) by a certain “senior citizen”, then the deduction under Section 80TTB won’t be applicable.
Section 80TTA vs. Section 80TTB: Know The Differences
Below are the key differences between Sections 80TTA and 80TTB of the Income Tax Act
| Comparison Criteria | Section 80TTA | Section 80TTB |
| Eligible Taxpayers | Individuals <60 years and HUFs | Senior Citizens aged 60 years or older |
| Applicability | Interest income from savings accounts only | Interest income from savings accounts, fixed deposits and recurring deposits |
| Deduction Limit | Rs. 10,000 in a FY | Rs. 50,000 in a FY |
| NRI Provision | NRIs are eligible | NRI i.e. non-residents cannot avail this benefit |
Conclusion:
Section 80TTB is an excellent tax-saving scheme for senior citizens who earn interest income on their savings accounts, fixed deposits, and other fixed-income instruments. The scheme provides a significant tax benefit to senior citizens by allowing them to claim a deduction of up to Rs. 50,000 on their interest income. The bank deducts TDS (Tax deducted at Source) at the rate of 10% if the PAN is provided by the depositors. If it is not provided, the rate increases to 20% resulting in a loss of the depositor. Section 80TTB with being in effect from the assessment year 2019-20 has been a big relief for senior citizens. If you are a senior citizen and earn interest income on your savings, consider investing in schemes such as SCSS, PMVVY, and other similar schemes to avail the benefits of Section 80TTB. Always consult a tax professional to make an informed investment decision and maximize your tax savings.
