Section 80TTB Deduction for Senior Citizens

Section 80TTB is a tax provision designed to ease the financial burden of senior citizens. It recognizes that older individuals often depend on interest income for their regular expenses and face rising medical and living costs. By offering a special deduction on such income, this section provides meaningful tax relief and helps ensure better financial stability in their retirement years.

Key Highlights

• Deductions can be claimed only under the Old Tax Regime.
• Not available for partners of firms or members of AOP/BOI. 
• Interest on bonds/debentures is also ineligible.
• Deduction allowed for both saving and fixed deposit interest up to Rs.50,000

What is Section 80TTB?

Section 80TTB is a special tax benefit available to senior citizens (aged 60 years or above) that allows them to claim a deduction of up to Rs.50,000 on interest income earned during a financial year. This deduction covers interest from savings accounts, fixed deposits, and recurring deposits with banks, co-operative societies, and post offices. 

It was introduced in the Union Budget 2018 to provide financial relief to senior citizens, as they largely depend on interest income for their daily expenses and face rising healthcare and living costs. By reducing their taxable income, this provision eases their financial burden and ensures greater savings in their retirement years. 

Unlike Section 80TTA, which offers a smaller deduction of Rs.10,000 and excludes fixed deposits, Section 80TTB is more comprehensive and exclusively benefits senior citizens.

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?