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Section 80TTB of Income Tax Everything you need to know

By Rishabh Chamoli | 2022-11-14

Realising that Income tax can be burdensome for senior citizens, the Central government enacted Section 80TTB in the Income Tax Act, which provides a plethora of deductions and exemptions for reducing their payable mandatory tax monies. This could be seen as a special benefit for those sections of senior citizens who are overly reliant on income earned through interest for meeting expenses after retirement.

To provide more relief to senior citizens of 60 years and above, the Central government brought Section 80TTB under the Income Tax Act 1961 in 2018. This new section aims to give a tax deduction to this category of taxpayers to enable them to strengthen their financial foundation. Let us know more about it

What is Section 80TTB of Income Tax Act?
Section 80TTB of the Income Tax Act 1961 was introduced in the Budget 2018. Came into effect in April 2018, this newly inserted section enables senior citizens of age 60 years or more to enjoy a tax deduction of up to Rs 50,000 on the interest earned in a financial year based on the investments.

In other words, the gross income of a senior citizen based on the investments he or she has made will be subjected to taxation. As per this section, the senior taxpayer will be eligible to apply for the tax exemption of up to Rs 50,000 for a financial year if all the terms and conditions are fulfilled.

When is Section 80TTB applicable?
According to Section 80TTB, these are the applicable terms and conditions

A senior citizen has to be a resident of India.
He or she must be of 60 years or above
The eligible amount of tax deduction is limited up to Rs 50,000. It will be calculated on the tax levied on the gross total income of a taxpayer
The income from the savings account, fixed deposits, and recurring deposits, will be eligible for taxation and tax deduction
Deductions available under 80TTB, Income Tax Act

The tax deduction will be applicable based on the following types of income

The interest earned from the money invested in any financial instrument of a bank or a financial institution recognised by the banking Regulation Act 1949 (10 of 1949) will be eligible for taxation and tax deduction
Interests that a senior citizen earns from investments in the cooperative society will be eligible for a tax deduction. The society must be registered and involved in banking businesses
The interest earned from the deposits in post offices will also be eligible for deduction under this section. The post office must fall under the recognition and definition as per the Clause K of Section 2 in the Indian Post Office Act 1868 (6 of 1898)

How can senior citizens achieve tax savings?
According to Section 80TTB, if the total gross income generated is over Rs 50,000, the taxpayer can apply for a tax exemption of Rs 50,000. If it is less than Rs 50,000, he can only apply for the exemption of that amount
Besides enjoying tax deductions under Section 80TTB, a senior citizen can save on taxes by opting for the senior citizens saving scheme (SCSS), following the income tax slab rates and applying specific sections of the Income Tax Act 1961, and investing in health insurance

Key takeaways about Section 80TTB
Section 80TTB allows an additional tax deduction for senior citizens who are aged 60 years and above
A senior citizen can enjoy a deduction of Rs 50,000 on the interest earned in the financial year
The section covers income from saving accounts, fixed deposits and recurring deposits