During the Budget 2018, Finance Minister inserted a new Section
80TTB. This allows a tax deduction of up to Rs.50,000 with respect to
interest income from FDs held by senior citizens. Let see the features
of this section.
FDs
or fixed instruments are the major backbones of many of the senior
citizens. However, the majority of these fixed instruments are not so
tax efficient. Hence, to give some relief to senior citizens Finance
Ministry introduced this new Section 80TTB.
This amendment is effective from Financial Year 2018-19 or Assessment Year 2019-20.
Who is eligible to claim the deduction under Section 80TTB?
Senior
Citizen who is holding the FDs with Banks, Co-operative Banks and also
in Post Offices and earning the interest income from such deposits are
eligible to avail the deduction under Section 80TTB.
Here, the
meaning of senior citizen is an individual resident in India who is of
the age of 60 Yrs or more at any time during the relevant financial
year.
Firms, an association of persons or a body of individuals are not allowed to claim the deduction under Section 80TTB.
Also,
if a senior citizen claimed the deduction under Section 80TTA (all
individuals can claim up to Rs.10,000 deduction against the interest
income received from a savings account), then they are not allowed to
claim the deduction under Section 80TTB.
How much can we claim as the deduction under Section 80TTB?
As
I mentioned above, if you are a senior citizen who is holding the FDs
with Banks, Co-operative Banks and also in Post Offices and earning the
interest income then you are eligible to claim up to the maximum of
Rs.50,000 in each financial year.
The maximum deduction allowed
under Section 80TTB is Rs.50,000. Hence, assume that you have Rs.45,000
as an interest income of FDs. In such situation, you are allowed to
claim only the actual interest income (because the actual interest
income is less than the maximum limit available under Section 80TTB).
Same
way, assume that you have Rs.60,000 as an interest income from all FDs
together. In that situation, as I mentioned the maximum deduction
allowable for deduction under Section 80TTB is Rs.50,000, you can claim
Rs.50,000 as the deduction. Rest of the Rs.10,000 will be your taxable
income.
Difference between Section 80TTA and Section 80TTB
| Particulars | Section 80TTA | Section 80TTB |
| Applicability | Applicable to individuals and HUF except senior citizens | Applicable to senior citizens |
| Specified income | Interest on savings account only | Interest on all kinds of deposits |
| Quantumof deduction | Upto Rs 10,000 | Upto Rs 50,000 |
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