With the increasing age, health issues arise and senior citizen suffers from both physical and mental issues. This cost for living increases due to this and put a dent on their finances. Hence, the government decided to give relaxations to the senior citizen in the form of tax deduction. Therefore, the government introduced Section 80TTB which is applicable with effect from 1st April 2018.
Section 80TTB Applicability
According to section 80TTB, any taxpayer who is a senior citizen where the age of that citizen exceeds 60 years at any given period during a financial year can claim a certain amount of deduction from their gross total income of that financial year.
Amount of Deductions Available
Under Section 80TTB a senior citizen can claim a deduction not more than 50K INR or specified income amount is permissible from the gross total income. Where the specified income includes the below-mentioned things:
- Interest on fixed deposits or saving bank deposits;
- Any interest received on a co-operative society banks deposits consisting of a co-operative land development bank / co-operative land mortgage bank; or
- Any interest earned on deposit in the post office
Section 80TTB Exceptions
The deduction under section 80 TTB is not available for the partner or member of the following business or firm if the deposits are held on behalf of
- Partnership Firm
- AOP (Association of Person)
- Body of Individuals (BOI)
Section 80TTA and 80TTB Difference
Section 80TTA provides deductions to every individual on the interest earned on savings account up to the limit of 10K INR from the gross total income of such individual taxpayer. The person can avail such deduction on the interest earned in a bank, co-operative bank or a post office savings account.
Whereas Section 80TTB is introduced exclusively for senior citizens which can be claimed for up to the limit of 50K INR. Section 80TTB was introduced by the government as a senior citizen cannot avail deduction under section 80TTA.
Let us understand the difference between section 80TTA and 80TTB in T-shape
|Applicability||Section 80TTA is applicable to the Individuals and Hindu Undivided Family (HUF).|
|Specified income||The deduction under this section can be taken on the interest on the saving bank account.|
|Maximum of deduction||The taxpayer can only take 10,000 INR deduction under section 80TTA from their gross total income.|
Example of Section 80TTB
Let us see the practical use of deduction under Section 80TTB
Senior citizen already has a higher basic exemption limit when compared with a normal taxable person. However, they have to look after their medical expense that itself back breaking thing. So to give more aid to them, the government introduced Section 80TTB. Let us see how a senior citizen can save their taxes using Section 80TTB:
Let us assume the following are the incomes of a senior citizen during a financial year:
- Interest received on saving account 10,000 INR
- Interest earned on FD of 1, 00,000 INR
- Other income 5, 00,000 INR
Let us see how Section 80TTB benefits a senior citizen to save more tax
|Particulars||Before Section 80TTB||After Section 80TTB|
|Interest received on saving account||10,000||10,000|
|Interest earned on Fixed Deposits||1 ,00,000||1 ,00,000|
|Other income||5 ,00,000||5,00,000|
|Gross total income||6,10,000||6,10,000|
|Less: Deduction under Section 80TTA||Not Applicable||Not Applicable|
|Less: Deduction under Section 80TTB||Not Applicable||-50,000|
|Tax on Above||34,500||24,500|
|Add CESS @ 4%||1,380||9,80|
So through the above example, we can notice that the before the introduction of Section 80TTB the senior citizen has to pay 35,880 INR as tax whereas after the introduction he has to pay 25,480 INR as tax.