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Regular post-retirement income | Additional tax benefit on investments up to ₹50,000 u/s 80CCD (1B) - EEE Category | Regulated by PFRDA (Pension fund regulator under Ministry of Finance, Govt. of India)

The Income Tax Act of 1961 consists of a number of sections that detail out the rights and duties of a tax-paying citizen with regard to their income and source of income (s). It states the tax liabilities, computations of taxes deducted at the source, rights to claim deducted taxes, etc. 

What is Section 80TTB of Income Tax Act?

Ageing is generally associated with loss of earning potential and health concerns. This means that senior citizens are vulnerable to financial insecurity, which is why it becomes crucial that we offer adequate tax relaxations to help them manage their finances. 

The Indian government has introduced a few crucial amendments in the Finance Budget, 2018 by introducing a new provision - the Section 80TTB.

As per Section 80TTB, a resident tax paying senior citizen, who is 60 years of age and above during the financial year, can make tax deduction claims of up to ₹50,000. The 80TTB deduction for senior citizens gives senior citizens an avenue to save up on taxes and become financially secure. 

Who Can Claim Deductions Under Section 80TTB?

Senior and super senior citizens, who are aged 60 and above during the financial year are eligible to make tax deductions claims under Section 80TTB. Here are all different types of interest income for which senior citizens may claim deductions under Section 80TTB. 

  • Interest income on deposits that are held with a banking institution. 

  • Interest income on deposits with any registered co-operative society. 

  • Any interest income on deposits held with a post office. 

Exceptions to Deductions Under Section 80TTB of Income Tax Act

Generally, in order to be eligible for deduction under Section 80TTB, a resident senior citizen should hold the deposit. Therefore, this rule will not be applicable under certain circumstances. If the interest income is earned through a deposit that’s held in the name of any the following, then the Section 80TTB will not be applicable, 

  • Body of Individuals 

  • An association of persons 

  • A partnership firm

A number of categories of individuals, other than senior citizens, can access tax benefits and reclaim the deducted taxes. These entities include Hindu Undivided Families (HUFs), non-resident Indians and alternate income acquired through savings accounts held by institutions such as an associate of persons, a confederation of individuals and firms.

There are certain deposit types that help you earn alternate income that aren’t considered for tax exemptions. Essentially, returns earned through deposits from banking institutions, a post office, and a co-operative society can claim tax deductions by all tax-paying senior citizens under Section 80TTB of Income Tax Act 1961. That which extends these alternate sources of income will not be eligible for any exemptions. 

How to Calculate Your Deductions Under Section 80TTB?

Senior and super senior citizens can make deductions of up to ₹50,000 under Section 80TTB. Here’s an illustration to help you understand deductions under Section 80TTB. Let’s suppose that the following is your interest income from various sources: 

  • Fixed deposit returns: ₹23,000

  • Recurring deposit returns: ₹25,500

  • Savings account deposit returns: ₹3,000

  • Bond returns: ₹2,000

Interest Returns Income

Taxability

Amount in ₹

Amount in ₹

Fixed Deposit Interests

-

₹23,000

-

Savings account deposit returns

-

₹3,000

-

Recurring deposit returns

-

₹25,500

-

Total Interest Income Exemption

-

-

₹50,000

Total Interest Return Taxable

Taxable

-

₹1,500

Returns From Bonds

Taxable

-

₹2,000

Total Taxable Interest Returns

-

-

₹20,500

 

Illustration of Tax Benefit for Senior Citizens Under Section 80TTB

Senior citizens are given major tax-saving benefits through this section of the Income Tax Act of 1961. Considering the following variables, you will find a comparison made between the taxable income for non-senior citizens and senior citizens. 

  • Savings Interest: ₹5,000

  • Fixed Deposits Interest: ₹2,00,000

  • Alternate Income: ₹1,50,000

Specifications

Senior Citizens

Non-senior Citizens

Fixed Deposit Interest

₹2,00,000

₹2,00,000

Savings Account Interest

₹5,000

₹5,000

Other Income

₹1,50,000

₹1,50,000

Gross Income

₹3,55,000

₹3,55,000

Section 80TTB

Deduction

-

₹5,000

Section 80TTA Deduction

₹50,000

-

Taxable Amount

₹3,05,000

₹3,50,000

 

Difference Between Deduction Under Section 80TTA and Section 80TTB

Specifications

Section 80TTB of the Income Tax Act

Section 80TTA of the Income Tax Act

Introduction

2019 - 20 AY

2015 - 14 AY

Eligibility Criteria 

Applicable to individual taxpayers and HUFs (Hindu Undivided Family). Not applicable to resident senior citizen taxpayers. 

Only resident senior citizens are eligible. 

Type of Interest Income 

Only savings account interest returns only. 

Savings Account

Fixed Deposit Account

Recurring Deposit Account

Exemption Limit 

₹10,000 annually

₹50,000 annually

NRI ELigibility

NRI accounts

NRO accounts

Deductions do not apply to NRIs.

Claim Process

Deductions can be accessed by filing Income Tax Returns.

Deductions can be claimed by filing 80TTB at ITD. 

 

Documents Required

There are a few documents that you might require in order to take your 80TTB deductions forward. These are some of the most common documents that may be required: 

  • Form 16

  • Bank documentation such as your passbook, statements, etc.

  • PAN Card

Frequently Asked Questions

✔️How can you claim under Section 80TTB deduction in the ITR?

You can start by filing your IT return to make a deduction claim under Section 80TTB of the Income Tax Act. Your income is to be added to the income under the ‘Income from other sources’ head, and then claim it under Section 80TTB deduction.

✔️Is fixed deposit interest income taxable for senior citizens?

Yes, interest income from FDs is taxable according to law. However, senior citizens can claim deductions under Section 80TTB. 

✔️Are senior citizens eligible for deductions under Section 80TTB of the IT Act?

Yes, Section 80TTB deductions are available for all tax-paying resident individuals over the age of 60. 

✔️80TTB deduction is applicable for 2021-2022?

Yes, Section 80TTB of Income Tax Act will be applicable for 2021-2022.