1. Section 80TTB performance
Section 80TTB is a provision in which a senior resident taxpayer, who is 60 years or older at any time during the Financial Year (FY), may claim a certain amount as a deduction from his or her total FY income. This section is effective from 1 April 2018.
2. What is Section 80TTB?
This section entitles older persons to claim a maximum deduction of Rs 50,000 from interest earned on deposit. It is designed to help older people maintain a dignified life after retirement, many of whom do not rely on their interest-bearing income at these costs. The aim is to transfer strong support to the elderly so that they can maintain a healthy economy after retirement and thus, support a happy and healthy life. Older residents are also at risk of mental and physical illness which makes it necessary to save money for unexpected medical expenses. Section 80TTB has certain limitations and eligibility requirements that must be met in order to achieve the same benefits.
3. When was this section introduced?
Section 80TTB is set to take effect on 1 April 2018 which gives older persons the right to receive benefits from the 2018-2019 financial year. This Section serves as an increase , as the tax deduction limit has been increased from INR 10,000 to INR 50,000.
4. Deduction available through Section 80TTB
Deductions must be a specified amount of total revenue and must amount to Rs 50,000. Among the stated revenue, any of the following sources of revenue are calculated by their value -
- Interest on bank deposits; be it a savings, a recurring or non-refundable deposit.
- Interest on postal deposits.
- Interest on deposit deposits held in a co-operative organization that focuses on the banking business. This could include a corporate mortgage bank or a co-operative land development bank.
One should be aware that interest earned on savings accounts and a fixed or recurring deposit held by the above three parties will be considered for the purpose. In addition, there are also interests found in other types of offices. These include topics such as the Senior Citizen Scheme account accounts, post-time deposits, five-year recurring deposits and Monthly Post Revenue Schemes. Thus, one might conclude that Section 80TTB only specifically refers to sources of interest that are fully liable for the deduction. However, the interests acquired in any other programs and sources such as interest from the FD company will not be eligible for the said hold. Also, interest earned on bonds and loans will not be eligible for deduction under this Section.
Interest income is usually added to the individual's total income and is taxed at the rate determined by that person.
5. What is the eligibility for Section 80TTB deduction?
Older citizens according to the definition set out in the Income Tax Act , 1961 are those persons who are eligible to apply Section 80TTB. The following are the legal eligibility criteria-
- Top Citizen
- The age must be 60 years or more at any time during the due Financial Year (FY)
6. What are the exceptions to Section 80TTB?
It should be noted that Section 80TTB only applies to adults who are Indian residents and not NRI (non-resident Indians). Variations in section 80TTB include:
- Non-senior citizens and HUFs.
- If interest income is derived from a deposit held, or on behalf of a firm, the Association of Persons (AOP) or the Body of Individuals (BOI) "senior citizen", then deductions are made under Section. 80TTB will not work.
7. What are the key differences between Section 80TTA vs 80TTB?
As already noted, there is a significant increase in the benefits for older persons in Section 80TTB compared to Section 80TTA.
- Section 80TTA has the same specifications as Section 80TTB except that it provides for interest on deposits only in a savings account held in a bank, co-operative bank or post office. The amount stated is INR 10,000 in total income for each taxpayer or Hindu Undivided Family (HUF). Therefore, it was available to everyone, regardless of age. However, the benefits of Section 80TTA were withheld from adults when Section 80TTB came into effect from the 2018-2019 financial year.
As Section 80TTB now applies to adults only, Section 80TTA is no longer available for adults. One can easily mark the following differences between the two categories.-
|Section 80TTA||Section 80TTB|
|Section 80TTA is applicable to individuals and HUFs except for senior citizens.||Section 80TTB is exclusive to senior citizens.|
|The quantum of deduction specified for Section 80TTA is up to INR 10000||In Section 80TTB, the quantum of deduction enlarges to INR 50000.|
|The specified type of income for the eligibility of Section 80TTA is the interest on Savings account.||Section 80TTB is more open to counting the interest income on all kinds of deposits.|
Several sections were introduced to amend Section 80TTA so that it became Section 80TTB, which was introduced specifically for adults. To get the full benefits, one has to make sure that he delivers his bank statements carefully, the PAN card is very important. The Bank deducts TDS (Source Tax) at a rate of 10% when PAN is provided by depositors. If not provided, the rate rises to 20% leading to the loss of the investor. Section 80TTB which has been in operation since the 2019-20 testing year has been a great relief to adults. It is not a dangerous fact that Section 80TTA is prohibited from them. In fact, the division of Categories into ordinary and old people makes the tax process much easier. Section 80TTB gives special consideration to older persons in need of special attention by the state in the reduction of their health and property. The process of obtaining benefits is also relatively new with new ways of completing tax returns and deposits via email. Thus, the amendment becomes a savior which must be respected as a decision by every citizen.
Frequently Asked Questions
How can senior citizens save more through Section 80TTB?
Tax breaks are advised to be used for maximum profit. A senior citizen should use tax breaks to invest such deposits in deposits with organizations listed in such a way that the total interest on deposits up to Rs 50,000 per financial year. It becomes a good investment strategy as interest rates are tax-free for adults. This is because interest is deducted from their income before taxes are collected.
What is the amount of deduction under section 80TTB for the FY 2019-20 and FY 2020-21?
Deductions amount to Rs.50,000 based on interest on adult savings. Older Citizens in charge of FDs, Savings Banks, Co-operative Banks, and Post Offices, which earn interest on those deposits, are eligible for deductions under section 80TTB.
What are the benefits of Section 80TTB of Income Tax Act?
Provides additional benefits for adults in the form of INR 50000 interest-bearing on FD etc.
Is deduction of interest income from deposit up to Rs.50,000/- under section 80TTB available to senior citizens is over and above deduction up to Rs.1,50,000 available under section 80C?
Yes, it is more than Rs 1.5 lakhs u / s 80C. From FY 2020-21 profits under section 80TTB will only be available under the old tax system and taxpayers who choose the new tax system will not be able to claim this benefit while applying ITR.
How is the interest earned on a senior citizen saving scheme taxable? Is the deduction under Section 80TTB applicable even if he/she comes under the 20% tax bracket?
Interest earned under this scheme is taxable at the hands of investors, Yes. Interest earned can be claimed as deductions / s 80TTB.