Section 80TTB - Income Tax Deductions for Senior Citizens

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

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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.

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

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

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