Section 80TTB was introduced in the year 2018. According to this section, the senior citizens are entitled to tax deductions. Every citizen is a retired person. There are still multiple ways through which they can earn. Some may rely on passive sources of income, which were activated during their working years. Others may depend on the monthly pensions, income from rent, reverse mortgage, and so on.Even after retirement, several privileges are bestowed upon senior citizens. This includes a high rate of interest on deposits, tax exemptions, and deductions on deposits. It is important that they are aware of all these financial advantages that are reserved for them. This article aims to achieve this feat and discuss all about 80TTB Deduction for the financial year 2020-21.
The Income Tax Act of 1996 has several sections. This article will educate the readers about the newly introduced section 80TTB. What exactly is Section 80TTB? What are the deductions offered under this section? Who is eligible to avail of deductions under this section?
What are some of the exceptions to this section? How to claim these deductions? What are the difference between Section 80TTA and Section 80TTB? These are some of the topics that will be discussed in great detail. To conclude, some frequently asked questions will also be answered.
What Is Section 80TTB?
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On the 1st April 2018, Section 80TTB came into existence. According to this section, senior citizens can avail of a deduction of RS.50,000. These deductions can be claimed on the interest earned on different deposits. This provision enables senior citizens to lead a peaceful life by reducing stress.
Many senior citizens depend on the interest income to meet their financial needs. The deduction under this section will lighten their burden of additional taxation. To avail of the benefits under section 80TTB, there are some necessary conditions.
Deduction Under Section 80TTB
The amount that is eligible for deduction under this section is not more than Rs.50,000. This amount is specified from the total income.
The sources of income that are liable for the deduction under this section are as follows.
- The interest earned on deposits from the post office small saving schemes.
- The interest earned on bank deposits such as fixed deposits, savings account, and recurring deposits.
- The interest earned on deposits from the co-operative society.
The deductions are valid only if the interest is earned on any of the deposits mentioned above. Apart from these, several more deposits and investments are earning interests. This includes schemes like the Senior Citizen Savings Scheme (SCSS) and post office small savings schemes. This deducts the interests earned through these schemes as well. If senior citizens earn interest from other sources like a company FD then this is not eligible for deduction. The deductions under this section do not apply to interest earned on bonds and debentures.
You can calculate the amount using the tools by Income Tax Department Of India.
What Are The Eligibility Criteria For Deduction Under Section 80TTB?
Every senior citizen is eligible to apply for deductions under this section. However, they should fulfill the following condition.
- He should be an Indian resident.
- He should be above 60 years.
- He should be holding a savings account, fixed deposit account or a recurring deposits account.
What Are The Exceptions To Section 80TTB?
There are certain exceptions under this section.This deductions can be only availed by Indian residents. Thus, NRIs are not allowed to avail of any deductions.
The exceptions under this section are as follows.
- The Hindu Undivided Families (HUFs) and individuals below 60 years of age are not permitted.
- The interest earned from deposits of a firm, Body of Individuals (BOI), and other associations are not exempted from deductions under this section.
How To Claim Deductions Under Section 80TTB?
Senior citizens can claim deduction under this section be filing the ITR. The applicant should add the sum of all the interests earned under the ‘Income From Other Sources’ segment. Later, they should input the same amount under Chapter VI-A to claim the deduction.
What Are The Differences Between Section 80TTA and Section 80TTB?
During the financial budget of 2018, this was introduced. Earlier section 80TTA included tax deductions for all the taxpayers. Now section 80TTA and Section 80TTB share similar specifications. Section 80TTA provides deductions only on savings account from banks and post offices. This deduction sums up to only Rs.10,000 from the total taxable interest.
Any taxpayer, irrespective of his age, could avail of deductions under section 80TTA. But once 80TTB was introduced the senior citizens were not allowed to avail of benefits under section 80TTA. Let’s look into the differences between the two sections for taxpayers today.
Related Frequently Asked Questions
1. How does tax deduction under section 80TTB benefit the senior citizens?
As it is visible from the table senior citizens enjoy great benefits under this section of income tax act.
2. What is the amount deductible under section 80TTB for the financial year 2020-21?
3. What are the tax deductions for non-senior citizens?
4. Are NRIs allowed to claim a deduction under section 80TTB?
5. Is interest earned on fixed deposits and recurring deposits exempted from taxation?
6. Are senior citizens permitted to avail of tax deductions under section 80TTA?
7. Are the deductions under section 80TTB a part of the deductions under section 80C?
The section 80TTB deduction has provided respite to the senior citizens. This is because of the deduction of Rs.50,000 from the taxable income. Section 80TTA was amended in 2018. Through which the tax deduction for senior citizens and other taxpayers were segregated. The segregation of sections has made the deduction procedure convenient for senior citizens.
This section is more considerate towards senior citizens who need the assistance of the government to cope up with their diminishing health and financial resources. Very often, senior citizens may find it difficult to meet their expenses post-retirement. But section 80TTB offers relief from the additional taxable amount.
During the financial year 2020-21, the deduction under this section is Rs.50,000 as against Rs.10,000 which could earlier be availed by every taxpayer under section 80TTA. The introduction of 80TTB has been a boon to senior citizens today. Thus, every senior citizen should make good use of the benefits under this section. They are solely reserved for them.