Section 80TTB of the Income Tax Act: Meaning, Eligibility And Exceptions
Senior citizens already have to deal with mental and physical health issues that cause financial stress. So, to provide them with some aid, the Government of India introduced Section 80TTB of the Income Tax Act. This Section aims to simplify the lives of senior citizens and provide them with tax benefits.
To get more details on this Section, keep reading this article. Here we have discussed its exceptions, benefits, and eligibility criteria in brief.
What Is Section 80TTB of the Income Tax Act?
Section 80TTB of the Income Tax Act, 1961 is applicable for a senior citizen who has crossed the age of 60 years and is a resident of India. Under this Section, they can claim a deduction against the amount received as interest on a deposit made by them. It is deducted from their total gross income at the time of tax calculation. This provision took effect from April 1 2018, to provide tax relief to senior citizens.
What Deduction Amount Is Available under Section 80TTB?
The deduction amount under Section 80TTB for a senior citizen cannot exceed Rs. 50,000 or a specified income from the overall gross income of an individual. This specified income includes any of the following aggregate income:
- Interest gained from a deposit at a post office
- Interest from deposits held at a bank
- Interest income earned from deposits in a co-operative society running a banking business. For example, a co-operative land mortgages bank or a co-operative land development bank.
Also Read: Income Tax Rebate Under Section 87A
What Are the Benefits of Section 80TTB Deduction?
The following are the essential benefits as to why the government introduced Section 80TTB:
- It serves as a financial relief for the Indian senior citizens. Also, many can lead a better life by gaining higher deduction under this Section.
- Since the deduction is available for fixed and saving account deposits, it provides overall financial security to senior citizens.
- As a result of these tax benefits, senior citizens can plan their retirement and medical procedures in a better way. Hence, this gives them long-term financial security.
Eligibility Criteria for Claiming Deduction u/s 80TTB
The following are the essential criteria that an individual needs to fulfil to claim deduction under section 80TTB:
- A taxpayer must come under the senior citizen category, i.e., he/she must have passed 60 years.
- They must have a savings account, recurring deposit account, or fixed deposit account.
- The account must be at a post office, bank, or a co-operative society.
What Are the Exceptions to Section 80TTB Deduction?
Deduction under Section 80TTB of the Income Tax Act for AY 2021-22 will not be available in case interest is received from deposits that are held by/on behalf of the following:
- Association of Persons (AOP)
- Body of Individuals (BOI)
- A partnership firm
Other exceptions are as follows:
- HUF, non-residents, and individuals are not eligible for Section 80TTB deduction.
- No tax benefit will be available if the interest income is earned from NCDs, bonds, or company fixed deposits.
Also Read: How To File ITR-1 Online?
How to Calculate Tax Deduction under Section 80TTB of the Income Tax Act?
An example is mentioned down here to help you understand the calculation process of deduction under Section 80TTB of the Income Tax Act:
Suppose here we are calculating deductions of Mr. Singh, a senior citizen having an age of 65 years and is a resident of India. The total earnings of Mr Singh are as follows:
- Rs. 22,000 (Interest earned from the fixed deposit)
- Rs. 4,000 (Interest earned from saving account deposit)
- Rs. 27,000 (Interest from the recurring deposit)
- Rs. 2,500 (Interest from bonds)
- Rs. 15,000 (Interest earned from a deposit made on behalf of a partnership firm)
Calculation of the deduction under section 80TTB of the Income Tax Act is provided below:
| Source of Income | Amount Calculation |
| Interest earned from fixed deposit | Rs. 22,000 |
| Interest earned from saving account deposit | Rs. 4,000 |
| Interest from recurring deposit | Rs. 27,000 |
| Total taxable amount | Rs. 53,000 |
| Maximum Deduction allowed under Section 80TTB of the Income Tax Act | Rs. 50,000 |
| Balance taxable amount from above | Rs. 3000 |
| Interest from bonds | Rs. 2,500 |
| Interest earned from a deposit made on behalf of a partnership firm | Rs. 15,000 |
| Total deduction amount | Rs. 20,500 |
Final Word
You can find all the information you need on Section 80TTB of the Income Tax Act in the above section. It will guide you about who is eligible to claim deductions under Section 80TTB, exceptions, benefits of getting these deductions, etc. Go through these sections to avoid any confusion.
Frequently Asked Questions
1. How to claim deduction under Section 80TTB?
To claim deduction under Section 80TTB, one must first add the aggregate amount of interest they get from different deposits included in the Section. Next, add them under the head ‘Deductions and Total Taxable Income’ to claim the amount. Your net amount remaining after deduction will be your taxable amount.
2. Is Section 80TTB deduction applicable for the assessment year 2021-22?
Yes, taxpayers will get deduction under Section 80TTB for the assessment year 2021-22. However, it is only applicable for those who are a resident of India and are aged above 60 years. Also, the deduction is deductible from the total gross income that an individual is earning in that financial year.
3. Is there any difference between Section 80TTB and 80TTA?
The following are the differences between Section 80TTB and 80TTA:
- 80TTB is for senior citizens, while 80TTA is for individuals and HUFs who have not crossed 60 years.
- NRIs with an NRO can claim deductions under 80TTA, while under 80TTB, only resident Indians can claim deductions.
- Deduction under 80TTA is available for interest income through a savings account only. In contrast, under 80TTB, interest from savings, fixed, and recurring accounts are eligible for deduction.
- The exemption limit for 80TTA cannot exceed the Rs. 10,000 limit, while the limit for Section 80TTB is Rs. 50,000 per year.
4. Can a senior citizen claim deduction under both Section 80TTA and 80TTB?
Since Section 80TTA deduction is only available to individuals and HUFs who are not senior citizens, a senior citizen cannot claim the benefits of both Section 80TTA and 80TTB. Also, it offers similar benefits, so one cannot avail both.
5. What are the documents required to claim deduction u/s 80TTB?
The following are the documents required to claim deduction under Section 80TTB:
- PAN card
- Bank documents like your account statement and passbook
- Form 16 that reflects your bank account data
When you have all the required documents, citizens must file their income tax returns and present them along with the form to the IT department.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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