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 a number of tax deductions to benefit senior citizens in India to alleviate some of the challenges they face. Section 80TTB of 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.
Who can claim 80TTB deduction?
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 income tax act.
However, the following entities cannot claim this deduction:
- Non-Resident Indians
- Residential Individuals and HUFs other than senior citizens
Furthermore, from AY 21-22, if the taxpayer opts for a new tax regime, they cannot claim a deduction under section 80TTB of income tax act.
What is the threshold for 80TTB deduction?
As discussed formerly, a resident senior citizen will be able to claim a deduction of up to INR 50,000 under this section.
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. But 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 rest will be taxable.
Which Interests are Eligible for Deduction Under Section 80TTB?
The deduction is allowed on interest earned from the following deposits:
- Interest earned on Bank Deposits i.e, saving account interest, fixed deposits, recurring deposits
- Any interest earned on deposits with any registered Co-operative Society that is 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
The deduction is disallowed on interest earned from the following deposits:
- 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 the deduction while computing their total income
- Interest earned on Bonds and Debentures
- Interest earned from NBFC (Non-Banking Financial Company)
How is the Deduction Calculated Under Section 80TTB?
In order 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 2022-23:
- 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 for 80TTB deduction for AY 2022-23 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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How to Claim Interest Deduction?
Individuals/HUFs can claim 80TTB deduction while filing 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 ITR, first, 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.
What are the 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.
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 a year | Maximum INR 50,000 a 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. From FY 2018-19 onwards, resident senior citizens can only claim a deduction on interest under section 80TTB of income tax act. However, for earlier financial years deduction on interest income can be claimed under section 80TTA.
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, you 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.