Budget 2018 introduced a new section 80TTB under the Income Tax Act which allows resident senior citizens to claim a deduction on interest income up to Rs. 50,000. This section is applicable from FY 2018-19 (AY 2019-20) onwards. For earlier years deduction was allowed under section 80TTA.
Who can claim deduction u/s 80TTB?
This section is introduced to give more benefits to senior citizens of India. Any resident individual who has attained the age of 60 years or more during FY 2018-19 can claim deduction u/s 80TTB. An NRI senior citizen cannot claim deduction u/s 80TTB.
What is the deduction limit u/s 80TTB?
A resident senior citizen will be able to claim deduction up to Rs. 50,000 under this section. If interest earned from the specific deposit is less than Rs. 50,000 the same would be allowed as deduction u/s 80TTB. But if interest earned from the specific deposit is more than Rs. 50,000 then maximum Rs. 50,000 is allowed as a deduction.
Which interests are eligible for deduction u/s 80TTB?
The deduction is allowed on interest earned from following deposits:
- Interest earned on Bank Deposits i.e, saving account interest, fixed deposits, recurring deposits.
- Any interest earned on deposits with Co-operative Society engaged in banking.
- Interest earned from Post Office Deposits i.e, Saving Account Interest, NSC, Senior Citizens Savings Scheme Accounts, Time Deposits, 5-year recurring deposits, and monthly income schemes.
Deduction under section 80TTB is not allowed on following deposits:
- Interest earned from Company FD.
- Interest earned on Bonds and Debentures.
Let’s take an example to understand it better: Mr. Inder is a resident senior citizen. And he has earned the following income during the FY 2018-19:
- Interest earned from Bank FD: Rs. 26,000
- Interest earned from Senior Citizens Savings Scheme (SCSS): Rs. 32,000
- Interest earned on Debentures: Rs. 3,500
Deduction under section 80TTB is available only on interest from Bank FD and SCSS. And eligible deduction under section 80TTB is Rs. 50,000.
How to claim deduction u/s 80TTB?
You can claim a deduction by filing your ITR. First, you need to add total interest earned as income under the head “Income From Other Source”. And then enter the same amount as a deduction under Chapter VI-A.
No, an NRI senior citizen can not claim deduction under this section. However, they can claim a deduction on interest from savings account under section 80TTA.
No. From FY 2018-19 onwards, resident senior citizens can only claim a deduction on interest under 80TTB. However, for earlier financial years deduction on interest income can be claimed under section 80TTA.
Yes, you can claim a deduction for interest earned from RD and FD and some more specific deposits up to Rs. 50,000 pa.