Section 80TTB

 2018 Budget included introduction of Section 80TTB of Income Tax Act, 1961. Deductions that apply to interest that senior citizens accrue on their savings deposits are covered by this provision. Section 80TTB Deduction for Senior Citizens must make it point to become fully informed about not only eligibility, restrictions, but also exceptions associated with this provision in order to take advantage of deductions made available under it. 80TTB income tax provision allows senior citizens to claim deductions on interest income from deposits, providing them with tax benefits. Lets dig into this blog to know what is section 80ttb.
 

What Is Section 80TTB?

Seniors' physical & mental health are frequently linked to aging, which has detrimental effect on their financial situation. As result, it's essential to give them sufficient breaks in form of tax breaks. 
In light of this, government consistently introduces new regulations aimed at making life easier for senior folks. Numerous advantages have been chosen to be included for our senior citizens in Finance Budget 2018. One significant change to 2018 Budget (pertaining to senior citizens) is addition of new section called 80TTB.
 

Who Can Claim 80TTB Deduction?

According to Section 80TTB's tax provision, residents who are 60 years of age or older are only ones who are eligible to deduct interest payments. Notably, older adults can deduct interest they earn on their deposits from their income in given fiscal year if they have bank accounts such as savings accounts, recurring deposit accounts/fixed deposit accounts.
Under Section 80TTB Income Tax Act, senior citizens can avail of deductions of upto ₹50,000 on interest earned from deposits with banks, post offices/co-operative societies. 80TTB Income Tax deduction applies to all types of interest income, including not only savings accounts, fixed deposits, but also recurring deposits. Therefore, senior citizens should utilize 80TTB income tax benefit to not only maximize their savings but also reduce their tax liability.

Benefits of Section 80TTB for Senior Citizens

Seniors already benefit from higher basic tax exemption ceiling than do regular taxpayers. Furthermore, for organizations older than 60, Section 80TTB of Income Tax Act allows for even greater tax savings.

For instance: Assume that Mr. Yogyesh, a senior citizen, has accrued interest from these revenue streams:

Interest on deposits equals Rs 5,000.
2,00,000 has been accrued on fixed deposits.
Other sources of income = Rs 1,50,000

The chart below provides important context for understanding how Sec. 80TTB benefits senior folks.

Deductions under Section 80TTB in ITR

The total interest amount earned is the maximum deduction allowed by Section 80TTB, whichever is lower.
1. Not more than Rs. 50,000.
2. For example, under this clause, all interest profits are allowed as deductions if the income earned on deposits is less than Rs. 50000. Alternatively, companies will be able to claim deductions of Rs. 50,000 under Section 80TTB if the total amount of interest accrued exceeds Rs. 50,000.
A deduction from the gross total income of Rs 50,000, or the income amount, whichever is less, is permitted. Any of the following income, taken as a whole, is considered income here:

• Interest on fixed or savings bank deposits
• Interest on funds deposited with a cooperative society that conducts banking, such as a cooperative bank for land development or mortgage.
• Post office deposit interest.

Section 80TTA Vs Section 80TTB

Like Section 80TTB, Section 80TTA offers deductions. Nevertheless, it only allows interest deductions of up to Rs 10,000 for taxpayers under the age of sixty or to a Hindu Undivided Family (HUF) on savings accounts kept in banks, co-ops, or post offices.  
Senior citizens are no longer eligible for the deduction under Section 80TTA due to the creation of Section 80TTB, which is reserved for them.
 

Exceptions Under Section 80TTB

Under Section 80TTB of the Income Tax Act, the following entities—residential people and HUFs other than senior citizens—are not allowed to claim tax deductions.

• Indians who do not reside there.
• The income derived from savings accounts owned by organizations such as Associates of Persons, which are groups of people or businesses.

However, it is important to keep in mind that elderly individuals are not eligible for interest deductions on some forms of deposits. Under this part of the Income Tax Act, interest earned on savings accounts maintained with banks, post offices, or cooperative societies should ideally be able to be claimed as a tax deduction. Stated differently, profits derived from business bonds, NCDs, or fixed deposits will not qualify for the incentives offered under Section 80TTB. Section 80TTB deduction is not available for the partner of such a firm or any member of such an AOP or BOI while computing their total income.

Furthermore, as of FY 2022–2023, deductions under Sec. 80TTB are not accessible to senior citizens who elect to use the Alternative Tax Regime, which is governed by Section 115BAC.
 

Conclusion

By altering Section 80TTA, Section 80TTB is introduced specifically for older folks. For senior adults who invest largely in bank accounts and receive income from interest on their deposits, it offers substantial tax relief. However, the deduction under this Section will not apply to any income received from other sources, such as interest on bonds and debentures.
Interest income deduction & financial savings deduction are tax breaks that reduce your taxable income by allowing you to deduct portion of interest earned on your savings accounts & deposits. Section 80TTB of Income Tax Act in India specifically offers a deduction for interest income earned by senior citizens on deposits up to maximum limit (deduction limit). Understanding savings account taxation & how these deductions apply can help you save on your income taxes.