What is 80TTB in Income Tax
80TTB is the provision (section) defined under I-T Act, which allows tax benefits on interest earned from deposits with banks, post offices, or cooperative banks. The deduction is allowed a maximum of up to ₹ 50,000/- earned by senior citizens. In this article, you will find details about section Section 80TTB of the I-T, Act, but before understanding that, let’s understand what Income tax deductions all are about.
Income Tax deductions
As you may be aware that investments help in saving tax liability, but what you may not be aware of is that the Income Tax Department gives tax benefits for incurring some personal expenses as well (like health check-ups, paying stamp duty for home, and many more). These tax-deductible expenses are covered from section 80C to section 80U of the I-T, Act. They can be claimed/ used to reduce the gross total income and arrive at the taxable income. Thus, it is a kind of tax benefit which reduces your overall tax liability.
One of such deductions is defined under section 80TTB, Let’s get started!
What is 80TTB?
It is the provision defined under the Income-tax Act, of 1961 which was introduced in the Annual Budget 2018.
The senior citizens in India are affected by how taxes are imposed on them, by providing high medical treatment costs, and by lacking financial security. As Senior citizens are an important part of Indian Society, the government has introduced several tax deductions to benefit senior citizens in India to alleviate some of the challenges they face. As a result of this, it provides tax benefits to the senior citizen in the form of section 80TTB deduction on the interest income earned by them. The taxable income of the senior citizen is reduced to the extent of the maximum limit as specified under 80TTB.
Eligibility of Section 80TTB
Senior citizens and super senior citizens can claim the deduction under section 80TTB. As per the I-T Act, a Senior citizen is an individual who is 60 years or above in age but less than 80 years at any time during the financial year in which such income is earned. Similarly, an individual aged 80 years and above is called a Super Senior Citizen.
Only a Resident Individual can claim the deduction. So, the following person cannot claim this deduction:
- Non-Resident Indians
- Residential Individuals and HUFs other than senior citizens
Also, the provisions of section 80TTB were started on 1st April 2018. So, the deduction was available from 2018-2019 onwards.
Furthermore, from 1st April 2020, as the Government introduced the new tax regime, only the resident senior citizen continuing with the old tax regime can claim an 80TTB deduction. The benefit of Section 80 deductions is not available for people opting for the new tax regime.
80 TTB maximum limits
The deduction can be claimed up to ₹ 50,000/- on interest income earned. So, the deduction would be the interest amount OR ₹ 50,000 whichever is lower.
Scope of Section 80TTB
It provides a deduction of interest earned on any of the below deposits:
- Savings deposits
- Fixed deposits
- Recurring deposits
- Deposit with registered cooperative banks/society that is engaged in banking.
- Deposit in the post office i.e. NSC, Senior Citizens Savings Scheme Accounts, Time Deposits, 5-year recurring deposits, and monthly income schemes.
80TTB does not allow deduction on interest earned from the following deposits:
- If the Savings account or deposit is held by, or on behalf of a firm, an Association of Persons (AOP), or a Body of Individuals (BOI) then the partner or the member would not be permitted to avail of the deduction while computing their total income
- Interest earned on Bonds and Debentures
- Interest earned from NBFC (Non-Banking Financial Company)
Computation of 80TTB
Mr. A, aged 61, has a pension income of Rs 2,50,000 for the financial year 2021-22. He has deposited some amount in the savings account of a nationalized bank, recurring deposits with a private bank, and a deposit with a cooperative bank. He also holds debentures in ABC ltd. He earned interest on the deposit and debentures as below:
|Particulars||Amount (In Rs.)|
|Savings account interest||23,000|
|Recurring deposit interest||11,000|
|Interest from co-operative bank||10,500|
|Interest on debentures||22,500|
Total interest eligible for 80TTB Rs 44,500 (Rs 23,000+11,000+10,500)
Note – Interest on debentures not covered under section 80TTB.
As total interest eligible for deduction under 80TTB is less than Rs 50,000. The deduction amount will be Rs 44,500.
The Gross Total Income (GTI) of Mr. A. will be the Sum of Savings interest and Pension Income.
GTI = Rs 3,17,000 (2,50,000+23,000+11,000+10,500+22,500)
Taxable Income = Rs 2,72,500 (3,17,500 – 44,500)
80TTB is a deduction from Gross total income of an individual with age above 60 years. Since it was introduced in 2018, deductions were allowed for interest earned on deposits on or after 1st April 2018.
Frequently asked questions
Can a senior citizen claim interest earned on corporate deposits under 80TTB?
No, the 80TTB deduction is available only for bank interest.
Whether both 80TTA and 80TTB can be claimed at the same time?
No, 80TTA is applicable only for individuals below the age of 60 years where as 80TTB is for individuals above 60 years of age with a maximum deduction of Rs 50,000. Also, the eligibility and maximum limit of deductions differ in both cases.
Are deductions under I-T Act the same as exemptions?
No, the deduction is a concession, but the exemption is a relaxation. The deduction is allowed to specific persons that qualify the criteria. On the other hand, the exemption is allowed for all persons.
If I miss claiming a deduction under 80TTB, is there any option to rectify it?
Yes, you can claim the deduction by filing a revised I-T Return. However, if the timeline for filing a revised return expires, then the deduction lapses.