Senior citizens are an important part of Indian Society. From the high cost of medical treatment to the lack of financial security they are greatly affected by the way taxes are imposed. Because of this, the government has introduced several tax deductions to benefit senior citizens in India to alleviate some of the challenges they face. Section 80TTB of the Income Tax Act 1961 is one such deduction that was introduced in the budget 2018. This section is applicable from FY 2018-19 (AY 2019-20) onwards.
Eligibility to claim deduction u/s 80TTB
Any resident individual who has attained the age of 60 years or more can claim a deduction on interest income up to INR 50,000 under section 80TTB of the Income Tax Act.
However, the following entities cannot claim this deduction:
- Non-Resident Indians.
- Residential Individuals below the age of 60 years.
Furthermore, if the taxpayer is opting into a new tax regime, then they cannot claim a deduction under section 80TTB.
Threshold limit for 80TTB deduction
A resident senior citizen will be able to claim a deduction of up to INR 50,000 under this section. Hence, if the interest earned from the deposit is less than INR 50,000 then the whole would be allowed as a deduction under section 80TTB. However, if the interest earned from the deposit is more than INR 50,000 then a maximum of INR 50,000 is allowed as a deduction & the remaining amounts will be taxable.
Eligible interests for Deduction u/s 80TTB
The interest income from the following deposits is allowed as a deduction:
- Interest income from Bank Deposits i.e., saving account interest, fixed deposits, recurring deposits.
- Any interest income from deposits with any registered Co-operative Society that is engaged in banking.
- Interest income 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.
However, interest income received from the following deposits is not allowable to claim as a deduction:
- If the interest income is derived from any savings account or deposit held by, or on behalf of a firm, an AOP, or a BOI then the partner or the member would not be permitted to avail of the deduction while computing their total income.
- Interest income from Bonds and Debentures.
- Interest income received from NBFC (Non-Banking Financial Company).
Calculation of deduction
To understand the calculations better, let us take an example;
Mr Inder is a resident senior citizen, and he has earned the following income during the AY 2023-24:
- Interest earned from Bank FD: INR 26,000
- Interest earned from Senior Citizens Savings Scheme (SCSS): INR 32,000
- Interest earned on Debentures: INR 3,500
As per the rule, Mr. Inder will be eligible to claim 80TTB deduction for AY 2023-24 only on interest from Bank FD and SCSS.
Calculation of total taxable interest:
| Particulars | Amount |
| Bank FD interest | 26,000 |
| SCSS interest | 32,000 |
| Debenture Interest | 3,500 |
| Total Interest Income | 61,500 |
| Total Interest Income Exemption u/s 80TTB | 50,000 |
| Total Taxable Interest | 11,500 |
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Reporting deduction in ITR
Individuals can claim 80TTB deduction while filing an ITR if all the above-mentioned conditions are fulfilled. The taxpayer can claim the deduction in any of the ITR forms, i.e., ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources.
While filing the ITR, firstly, you need to add total interest earned as income under the head “Income From Other Source”. Then enter the eligible amount as a deduction under Chapter VI-A.
Supporting documents required
While claiming the deduction, you need not submit any proof while filing the ITR. However, for tax computation purposes, bank statements or interest certificates are sufficient. Further, the taxpayer should have a fixed deposit certificate, savings bank account statement, post office deposit documents, etc available with them.
Comparison between Section 80TTA and 80TTB
| Parameters | Section 80TTA | Section 80TTB |
| Eligibility | Individuals and HUFs (below 60 years) | Only senior citizens |
| Exemption Limit | Maximum INR 10,000 per year | Maximum INR 50,000 per year |
| Specified income | Deduction on interest from the savings account only | Deduction on interest from all kinds of deposits |
| Applicability for NRI’s | NRI who have a savings account (NRO) can claim a deduction u/s 80TTA | NRI’s are not eligible to claim deductions under 80TTB |
FAQs
Yes, the deduction of INR 50,000 under section 80TTB is available over and above the deduction of INR 1,50,000 available under section 80C.
No, a senior citizen can only claim a deduction of interest income u/s 80TTB.
No, an NRI senior citizen can not claim a deduction under this section. However, they can claim a deduction on interest from a savings account under section 80TTA.
Yes, the taxpayer can claim a deduction for interest earned from RD and FD and some more specific deposits up to INR 50,000 per annum.
Yes, 80TTB deduction can be claimed by any individual or HUF above the age of 60 years. Hence, it includes senior citizens as well as super senior citizens.
Can NRI claim a deduction u/s 80TTA?
Hi @Swapnil_Agarwal,
Yes, an NRI holding an NRO account can claim a deduction on saving bank account interest under section 80TTA.
Hope it helps.
Is a Deemed Resident (RNOR) eligible for sec 80TTA and sec 80TTB?
Is Deemed Resident ( RNOR) eligible for sec 80TTA and sec 80TTB ?
Hey @Yonujessi,
Yes, an RNOR can claim the exemption u/s 80TTA/TTB.
For interest income from recurring deposit with a cooperative society (non-agri), can deduction be claimed under section 80TTA ?
Hey @S_Gupta
Yes, you can claim a deduction under section 80TTA for interest amounts received on recurring deposits from cooperative societies.
Hope this is helpful!