Section 80TTB: Interest Deduction on Deposits for Senior Citizens

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 INR 50,000. This section is applicable from FY 2018-19 (AY 2019-20) onwards. For earlier years deduction was allowed under section 80TTA.

Deduction under section 80TTB is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80TTB is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who can Claim Deduction Under Section 80TTB?

Section 80TTB was 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 under section 80TTB . An NRI senior citizen cannot claim deduction u/s 80TTB.

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Deduction Limit Under Section 80TTB

A resident senior citizen will be able to claim deduction up to INR 50,000 under this section. If the interest earned from the specific deposit is less than INR 50,000 the same would be allowed as deduction u/s 80TTB. But if the interest earned from the specific deposit is more than INR 50,000 then maximum INR 50,000 is allowed as a deduction.

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Which Interests are Eligible for Deduction Under Section 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

Exceptions to Section 80TTB

Deduction under section 80TTB can only be claimed on the interest received on saving accounts held with a bank, co-operative society or post office. The interest received on below-mentioned earnings cannot be claimed u/s 80TTB:

  • Interest earned from Company FD
  • Interest earned on Bonds and Debentures

Furthermore, the following entities cannot claim section 80TTB deduction:

  • Non-Resident Indians
  • Residential Individuals and HUF’s other than senior citizens
  • Entities such as Associate of Persons, a body of individuals or firms are exempt from claiming the interest earned by them on the saving accounts

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 FY 2018-19:

  • 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

Deduction under section 80TTB is available only on interest from Bank FD and SCSS. And eligible deduction under section 80TTB is INR 50,000.

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How to Claim Deduction Under Section 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.

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ITR Form Applicable for Section 80TTB

The taxpayer can claim deductions u/s 80TTB while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80TTA in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.
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For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.

Supporting Documents

This tax deduction is accessible by all HUFs and individuals. The document required apart from the common documents such as Form 16, is the savings account bank statement is enough to calculate your interest in income and tax deductions on incomes.

FAQs

Can an NRI senior citizen claim deduction under section 80TTB?

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.

Can a senior citizen claim deduction 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.

Are FDs and RDs covered under 80TTB?

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.

Is the deduction that is availabe under section 80TTB over and above the deduction availabe under section 80C?

Yes, the deduction of INR 50,000 under section 80TTB is availabe over and above the deduction of INR 1,50,000 availabe under section 80C.

Got Questions? Ask Away!

  1. Hey @sushil_verma

    There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

  2. Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

    For eg,

    • Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
    • Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
    • Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

    Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

  3. The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

    Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

    As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

  4. Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.

  5. Hey @shindeonkar95

    In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

    However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

    Hope, it helps!

  6. Hello,

    Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

    There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

    I couldn’t find anything on this. Any help is appreciated.

  7. Hello @Veejayy,

    Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

    Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

    These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

    Also, interest earned on these bonds will be taxable.

    Hope this helps!

  8. Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total

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