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Old age is oft associated with health concerns both physically and mentally for the senior citizens, which in turn takes a heavy toll on their finances. Therefore, it is necessary to provide them with adequate relaxation in terms of financial outflow as well as from a compliance perspective.

Having this in mind, the government this time, vide Finance budget 2018 has chosen to introduce a good number of benefits for senior citizens. One such very significant amendment in Budget 2018 for senior citizens is the introduction of a new section i.e., Section 80 TTB.

1. Applicability of Section 80TTB

Section 80TTB is a provision whereby a taxpayer who is a resident senior citizen aged 60 years and above at any time during a Financial Year (FY) can claim a specified amount as a deduction from his gross total income for that FY. This section is applicable w.e.f 1 April 2018.

2. Quantum of deduction available

A deduction of lower of Rs 50,000 or amount of specified income is allowed from gross total income. Specified income is any of the following income in aggregate:

  • Interest on bank deposits (savings or fixed);
  • Interest on deposits held in co-operative society engaged in the business of banking including co-operative land mortgage bank or a co-operative land development bank;or
  • Interest on post office deposits

3. Exceptions to Section 80TTB

If specified deposits are held by or on behalf of a partnership firm, association of persons (AOP) or body of individuals (BOI), Section 80TTB deduction is not available in the hands of partner of such firm or any member of such AOP or BOI while computing their total income.

4. Section 80TTA vs 80TTB

Section 80TTA provides deduction similar to Section 80TTB. However, it provides for deduction of interest only on savings account held in bank, co-operative bank or post office, from gross total income of individual taxpayer or hindu undivided family upto Rs 10,000.

With an introduction of Section 80TTB exclusively for senior citizens, deduction under Section 80TTA is not available to senior citizens.

Difference between Section 80TTA and Section 80TTB

Particulars Section 80TTA Section 80TTB
Applicability Applicable to individuals and HUF except senior citizens Applicable to senior citizens
Specified income Interest on savings account only Interest on all kinds of deposits
Quantum of deduction Upto Rs 10,000 Upto Rs 50,000


5. Illustration on tax savings by senior citizens

Senior citizens already enjoy a higher basic exemption limit compared to normal taxpayers. Introduction of Section 80TTB further aids in saving tax for senior citizens. Let us see how with the following example.

Let us consider the following incomes for a taxpayer:

  1. Savings interest of Rs 5,000
  2. Interest on fixed deposits of Rs 200,000
  3. Other income of Rs 150,000

Now, the below table will help one understand how a senior citizen stands benefitted over a normal taxpayer with the provisions of Section 80TTB

Tax computation

(Amount in Rs)

Particulars Normal taxpayer Senior Citizen
Savings interest 5,000 5,000
FD interest 2,00,000 2,00,000
Other income 1,50,000 1,50,000
Gross total income 3,55,000 3,55,000
Less: Deduction under Section 80TTA 5,000 Not Applicable
Less: Deduction under Section 80TTB Not Applicable 50,000
Taxable income 3,50,000 3,05,000
Tax including cess 2,600 Nil


In the above example, the senior citizen ends up paying no taxes in comparison to an ordinary taxpayer below 60 years of age who pays Rs 2,600.

 

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