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    Section 80TTB Deduction for Senior Citizens

    Section 80TTB Deduction for Senior Citizens

    Old age is often associated with health concerns, both physical and mental for senior citizens, which in turn takes a heavy toll on their finances. Therefore, it is necessary to provide them with adequate relaxations in the form of tax deductions.
    Having this in mind, the government keeps on bringing new rules to simplify lives for senior citizens.
    The Finance Budget 2018 has chosen to introduce a good number of benefits for our senior citizens. One such important amendment in Budget 2018 (for senior citizens) is the introduction of a new section – Section 80 TTB.

     

    Old age is often associated with health concerns, both physical and mental for senior citizens, which in turn takes a heavy toll on their finances. Therefore, it is necessary to provide them with adequate relaxations in the form of tax deductions.
    Having this in mind, the government keeps on bringing new rules to simplify lives for senior citizens.
    The Finance Budget 2018 has chosen to introduce a good number of benefits for our senior citizens. One such important amendment in Budget 2018 (for senior citizens) is the introduction of a new section – Section 80 TTB.

    Recent Updates
    CBDT has issued a circular on 20th May 2021 extending the timelines for certain direct tax compliances for AY 2021-22.

    1. ITR Filing:
    i. The due date for filing ITR by taxpayers not covered under audit is extended from 31st July 21 to 30th Sep 21, for Tax audit cases it is extended to 30th Nov 2021 and for transfer Pricing cases, the due date is extended to 31st December. The due date to file a Belated or Revised Return is extended from 31st Dec 2021 to 31st Jan 2022.

    2. Furnishing Audit Report:
    i. The due date to furnish the audit report is extended to 31st Oct 2021, the audit report for transfer pricing cases is extended to 30th Nov 2021.

    Union Budget 2021 Update:
    Exemption from ITR filing to senior citizens aged 75 years and above, earning only pension and interest income.

    Applicability of Section 80TTB

    Section 80TTB is a provision whereby a taxpayer who is a resident senior citizen, aged 60 years and above at any time during a Financial Year (FY), can claim a specified amount as a deduction from his gross total income for that FY. This section is applicable w.e.f 1 April 2018.

    Amount of deductions available under 80TTB

    A deduction of lower than Rs 50,000 or an amount from a specified income is allowed from the gross total income. Specified income is any of the following income in aggregate:

    • Interest on bank deposits (savings or fixed);
    • Interest on deposits held in a co-operative society engaged in the business of banking, including a co-operative land mortgage bank or a co-operative land development bank; or
    • Interest on post office deposits

    Exceptions to Section 80TTB

    If the specified deposits are held by or on behalf of a partnership firm, an association of persons (AOP), or a body of individuals (BOI), Section 80TTB deduction is not available for the partner of such a firm or for any member of such an AOP or BOI, while computing their total income.

    Section 80TTA vs 80TTB

    Section 80TTA provides deductions similar to Section 80TTB. However, it provides deductions of interest only on a savings account held in a bank, co-operative bank, or a post office, from the gross total income of the individual taxpayer or a Hindu undivided family up to Rs 10,000.

    With the introduction of Section 80TTB exclusively for senior citizens, deductions under Section 80TTA is not available to senior citizens.

    Difference between Section 80TTA and Section 80TTB

    Particulars Section 80TTA Section 80TTB
    Applicability Applicable to individuals and HUF except for senior citizens Applicable to senior citizens
    Specified income Interest on savings account only Interest on all kinds of deposits
    Quantum of deduction Upto Rs 10,000 Upto Rs 50,000

    Illustration on tax savings by senior citizens

    Senior citizens already enjoy a higher basic exemption limit compared to normal taxpayers. The introduction of Section 80TTB further aids tax savings for senior citizens. Let us see how with the following example. Let us consider the following incomes for a taxpayer:

    • Savings interest of Rs 5,000
    • Interest on fixed deposits of Rs 200,000
    • Other income of Rs 150,000

    Now, the following table will help you understand how a senior citizen stands to benefit (as against a normal taxpayer) with the provisions of Section 80TTB Tax computation(Amount in Rs)

    Particulars Normal taxpayer Senior Citizen
    Savings interest 5,000 5,000
    FD interest 2,00,000 2,00,000
    Other income 1,50,000 1,50,000
    Gross total income 3,55,000 3,55,000
    Less: Deduction under Section 80TTA 5,000 Not Applicable
    Less: Deduction under Section 80TTB Not Applicable 50,000
    Taxable income 3,50,000 3,05,000
    Tax (before 87A rebate) 5,000 250
    Less: Rebate under section 87A 2,500 250
    Tax payable including cess @ 4% 2,600 NIL

    NOTE: For the AY 2020-21, the rebate under section 87A is available up to Rs 12,500 (for a total income up to Rs. 5,00,000). Hence, the above tax computation would change accordingly. In the above example, the senior citizen ends up paying no taxes in comparison to an ordinary taxpayer, below 60 years of age, who pays Rs 2,600.

    Frequently Asked Questions

    I am a senior citizen aged 67 years and have income from savings account Rs. 10000 and interest from Fixed Deposits Rs. 60000 from a nationalized bank. Can I claim deduction under section 80TTB?

    Yes, you can claim deduction under section 80TTB on both interest form savings and deposit accounts with banks, but the deduction amount is limited to Rs.50000.

    How can I claim deduction under section 80TTB?

    80TTB deduction can be claimed by filing your Income Tax Return. First, the income should be included in your income, and then 80TTB deducted can be claimed.

    80TTB deduction is applicable for AY 2020-21?

    Yes, 80 TTB deduction is applicable for AY 2020-21

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