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.
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.
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:
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 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.
|Particulars||Section 80TTA||Section 80TTB|
|Applicability||Applicable to individuals and HUF except for senior citizens||Applicable to senior citizens|
|Specified income||Interest on savings account only||Interest on all kinds of deposits|
|Quantum of deduction||Up to Rs 10,000||Up to Rs 50,000|
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:
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
|Particulars||Non-Senior Citizen (Rs)||Senior Citizen (Rs)|
|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|
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.
There are no special requirements while availing deduction under Section 80TTB. Your PAN and bank statement is sufficient for tax computation.
Yes, you can claim deduction under Section 80TTB on both interest from savings and deposit accounts with banks, but the deduction amount is limited to Rs 50,000.
You can claim deduction under Section 80TTB by filing your income tax return. First, the income should be included in your income under the head ‘Income from other sources’, and then claim Section 80TTB deduction.
Yes, Section 80TTB deduction is applicable for AY 2021-22.
Yes, this section applies to citizens above 60 years of age. Hence, this includes senior citizens as well as super senior citizens.