What is Section 80TTB?

Section 80TTB deductions under the Income Tax Act provide up to ₹50,000 for senior citizens on interest income from deposits in banks, cooperative banks, and post office schemes.  

 

Applicable to individuals aged 60 years or above, this provision includes interest earned from savings accounts, fixed deposits, and recurring deposits. The deduction is capped at ₹50,000, and it applies to the total interest income across all banks, preventing double deductions.

Section 80TTB deductions apply to the interest earned from savings accounts, fixed deposits and recurring deposits with cooperative societies and post offices. To qualify for this deduction, certain eligibility criteria must be met, which ensure that the benefit is targeted specifically at senior citizens residing in India.

The key eligibility criteria for claiming deductions under Section 80TTB are as follows:

1. Age Requirement

Individuals who are 60 years of age or older are considered senior citizens for this section.

2. Resident Status

The individual must be a resident of India to be eligible for deductions under Section 80TTB of the IT Act.

Senior citizens meeting the age and residential criteria can apply for requests on Section 80TTB deductions for interest income earned from specific sources. The sources include:

Savings Accounts

Senior citizens can request for deductions on interest earned from savings accounts held with banks, cooperative banks, or post offices, helping reduce taxable income from these routine deposits

Fixed Deposits

Interest income from fixed deposits with banks, cooperative societies engaged in banking, and post offices qualifies for deduction under Section 80TTB, up to Rs. 50,000 annually

Recurring Deposits

Interest earned on recurring deposits with eligible institutions like banks and post offices is also covered under Section 80TTB, providing tax relief on this steady income source for senior citizens

Post Office Monthly Income Schemes

Interest income from post office schemes, including monthly income schemes, is eligible for deduction, allowing senior citizens to benefit from tax savings on these government-backed deposits

Section 80TTB offers senior citizens a valuable tax benefit by allowing them to request a deduction on interest income earned from specified deposits. The maximum deduction limit under Section 80TTB is ₹50,000 on the total interest income earned during the financial year. If the interest income is less than or equal to ₹50,000, the entire amount is deductible.

 

To better understand how this deduction works and its limits, consider the following key points:

• If the total interest income earned during the financial year is less than or equal to ₹50,000, the entire amount is deductible from the gross total income.

• If the interest income exceeds ₹50,000, the deduction is capped at ₹50,000, and the remaining interest income will be taxable as per the applicable slab rates.

• The deduction applies collectively to interest income from savings accounts, fixed deposits, recurring deposits, and post office deposits held with banks, cooperative societies, or post offices.

• This benefit is exclusively available to resident senior citizens aged 60 years or above and cannot be claimed alongside Section 80TTA, which offers a lower deduction limit for non-senior taxpayers.

• To avail this deduction, senior citizens must report the eligible interest income and deduction while filing their income tax returns and retain supporting documents like interest certificates or bank statements.

To understand the applicability period and scope of this deduction, consider the following points:

Introduction and Effective Date

The deduction under Section 80TTB has been applicable since the financial year 2018-19, marking its introduction as part of the 2018 Union Budget.

Assessment Years Covered

It applies to all assessment years from 2019-20 onwards, including the current assessment year 2025-26.

Eligible Taxpayers

The provision is exclusively available to resident senior citizens aged 60 years or older.

Covered Interest Income Sources

It covers interest income earned from deposits with banks, cooperative societies engaged in banking, and post offices.

Ongoing Benefit

This ongoing applicability ensures that senior citizens continue to benefit from this tax relief on their interest income each year.

Let's consider the case of a senior citizen, for the financial year 2022-23 where he earns interest income from the following sources -

• Savings account interest: ₹20,000

• Fixed deposit interest: ₹40,000

• Recurring deposit interest: ₹15,000

• Post office monthly income scheme interest: ₹25,000

Therefore, he/she can claim a deduction of ₹50,000 under Section 80TTB for the financial year 2022-23.

There is no specific requirement for submitting documents while claiming deductions under Section 80TTB of the Income Tax Act. However, it is important to maintain proper records and documentation, as you may need to provide supporting documents in case of any scrutiny or verification by the tax authorities.

Here are the documents that individuals, especially senior citizens claiming deductions under Section 80TTB, may consider keeping for record-keeping purposes:

Interest Income Documents

• Bank statements or passbooks reflecting interest earned from savings accounts.

• Interest certificates are provided by banks for fixed deposits and recurring deposits.

• Documents from post offices indicating interest income from post office monthly income schemes.

Form 26AS

• Form 26AS is a consolidated tax statement that provides details of tax credits, including TDS (Tax Deducted at Source) on interest income. Taxpayers can access this statement online.

Income Tax Return (ITR) Acknowledgment

• A copy of the filed Income Tax Return (ITR) acknowledgment, which confirms the details of the income and deductions claimed.

Identification Documents

• Proof of identity and residence, as these may be required during the filing of income tax returns.

Any Other Relevant Documents

• Any other documents related to the specified interest income sources