Introduction:

You may already know that investments can help in reducing tax liability, but what you might not be aware of is that the Income Tax Department provides tax benefits for certain personal expenses as well, such as health check-ups, stamp duty for a home, and more. These deductible expenses fall under sections 80C to 80U of the Income Tax Act. They can be utilized to lower the gross total income, ultimately reducing taxable income. This type of tax benefit effectively lessens your overall tax liability. One such deduction falls under section 80TTB. Let’s delve into it!

Section 80TTB:

Senior citizens in India are particularly impacted by the imposition of taxes, especially given the high costs of medical treatment and the lack of financial security. Recognizing the significance of senior citizens within Indian society, the government has implemented various tax deductions aimed at alleviating some of the challenges they encounter. Consequently, it offers tax benefits to senior citizens through the section 80TTB deduction on the interest income they earn. This deduction reduces the taxable income of senior citizens up to the specified maximum limit under 80TTB.

Eligibility of Section 80TTB:

Senior citizens and super senior citizens are eligible to claim the deduction under section 80TTB. According to the Income Tax Act, a senior citizen is defined as an individual who is 60 years of age or above but less than 80 years at any time during the financial year in which the income is earned. Similarly, an individual aged 80 years or above is referred to as a super senior citizen.

Only a resident individual is eligible to claim the deduction. Therefore, the following individual cannot avail of this deduction:

• Non-Resident Indians

• Individual residents and Hindu Undivided Families (HUFs) who are not senior citizens

Moreover, starting from April 1st, 2020, with the introduction of the new tax regime by the Government, only resident senior citizens adhering to the old tax regime are eligible to claim an 80TTB deduction. Individuals opting for the new tax regime do not have access to the benefits provided under Section 80 deductions.

Deduction Under  80TTB:

The maximum deduction under Section 80TTB is determined as the lesser of the following:

• The total amount of interest earned.
• Maximum of Rs. 50,000.
• Interest earned on deposits held in a cooperative society involved in banking activities, which includes cooperative land mortgage banks or cooperative land development banks.
• Interest on post office deposits

Exceptions Under Section 80TTB:

The following entities are exempt from claiming tax deductions under Section 80TTB of the Income Tax Act:

• Residential individuals and Hindu Undivided Families (HUFs) who are not classified as senior citizens.
• The income generated from savings accounts held by entities such as an Association of Persons, a body of individuals, or firms.
• However, it’s important to note that senior citizens cannot claim deductions on interest accrued from certain types of deposits. Typically, interest earned on savings accounts held with banking institutions, post offices, or cooperative societies can be claimed as a tax deduction under this section of the Income Tax Act.

Documents Required for deduction:

• Bank statements, including passbooks and account statements
• PAN
• Form 16

Difference Between 80TTA and 80TTB:

Section 80TTA	Section 80TTB
Applicable to individuals and Hindu Undivided Families (HUFs), with the exception of senior citizens.	Applicable specifically to senior citizens.
Interest accrues only on savings accounts.	Interest is earned on all types of deposits.
The annual exemption limit is set at a maximum of Rs. 10,000.	The maximum exemption limit extends up to Rs. 50,000.
Eligible entities can claim deductions under Section 80TTA by filing their income tax returns.	Deductions under this tax provision can be claimed by filing 80TTB

Conclusion:

Section 80TTB, introduced through an amendment to Section 80TTA, is tailored exclusively for senior citizens. It offers substantial tax relief to senior citizens who predominantly invest securely in bank deposits and earn interest income from such deposits. Nevertheless, interest received from other sources, such as bonds and debentures, will not qualify for deduction under this section.