Section 80TTB Deduction for Senior Citizens

Old age is often associated with health concerns, both physical and mental, for senior citizens, which takes a heavy toll on their finances. Therefore, it is necessary to provide them with adequate relaxations in the form of tax deductions. 
Having this in mind, the government keeps on bringing new rules to simplify lives for senior citizens. The Finance Budget 2018 has chosen to introduce many benefits for our senior citizens. One such important amendment in Budget 2018 (for senior citizens) is the introduction of a new provision – Section 80TTB.

Budget 2025 Update

It was proposed to increase the threshold limit for TDS deduction u/s 194A on interest received from banks to Rs. 1,00,000 in case the assessee is a senior citizen and Rs. 50,000 for in any other case.

Get a better understanding about the section 80TTB in this article highlighting the following:

• Applicability of Section 80TTB
• Deductions under Section 80TTB
• Exceptions to Section 80TTB
• Comparison of 80TTA vs 80TTB
• Illustration on tax savings by senior citizens
• Documents Required
• Conclusion

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. 1st April 2018.

Note: This deduction is available only if the individual exercises the option of shifting out of the default tax regime provided under section 115BAC(1A).

Amount of deductions available under 80TTB

A deduction of Rs 50,000 or the income amount, whichever is lower, is allowed as deduction from the gross total income. Income here means any of the following income in aggregate:

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

Exceptions to Section 80TTB

Suppose the specified deposits are held by or on behalf of a partnership firm. In that case, an Association of Persons (AOP), or a Body of Individuals (BOI), Section 80TTB deduction is not available for the partner of such a firm or any member of such an AOP or BOI while computing their total income.

Section 80TTA vs 80TTB

Section 80TTA provides deductions similar to Section 80TTB. However, it offers interest deductions up to Rs 10,000 only on a savings account (held in a bank, co-operative bank, or a post office) and only for taxpayers below the age of 60 years or to a Hindu Undivided Family (HUF).  

With the 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

Illustration on tax savings by senior citizens

Senior citizens already enjoy a higher basic exemption limit compared to normal taxpayers. The introduction of Section 80TTB further aids tax savings for senior citizens. Let us see how with the following example. Let us consider the following incomes for a taxpayer:

• Savings interest of Rs 5,000
• Interest on fixed deposits of Rs 2,00,000
• Other income of Rs 1,50,000

Now, the following table will help you understand how a senior citizen stands to benefit (as against a normal taxpayer) with the provisions of Section 80TTB 

Computation of Taxable Income

In the above example, a non-senior citizen can claim only a savings interest deduction of Rs 5,000 under Section 80TTA. Whereas a senior citizen can claim savings interest and fixed deposits interest deduction restricted up to Rs 50,000.
Read more about 80TTA here.

Documents Required

There are no special requirements while availing deduction under Section 80TTB. Your PAN, Interest certificate and bank statement is sufficient for tax computation.

Conclusion

Section 80TTB is introduced exclusively for senior citizens by amending Section 80TTA. It provides significant tax relief to Senior citizens who primarily invest securely in bank deposits and earn income from interest on such deposits. However, any interest received from other sources, such as interest on bonds and debentures will be ineligible for the deduction under this Section.

Related Articles
Annual Information Statement
Section 80TTA- Deduction on interest on Savings account
Income from Other Sources
When & How to Pay Income Tax on Fixed Deposit’s Interest Income?