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Business News/ Money / Personal Finance/  Income tax benefits for senior citizens on interest income from savings, fixed deposits — explained in eight points
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Income tax benefits for senior citizens on interest income from savings, fixed deposits — explained in eight points

Section 80TTB of the Income Tax Act provides tax benefits for senior citizens on interest income from deposits, allowing a deduction of Rs. 50,000 on deposits from the Post Office, Bank, and Cooperative Society

As the interest under Section 80TTB is exempt up to Rs. 50,000, resident senior citizens benefit. (Mint)Premium
As the interest under Section 80TTB is exempt up to Rs. 50,000, resident senior citizens benefit. (Mint)

Section 80TTB of the Income Tax Act outlines the tax benefits that senior citizens can avail of regarding the interest income they receive from deposits. The Finance Budget 2018 introduced several benefits specifically targeted at senior citizens, one of which is the new provision - Section 80TTB.

According to Balwant Jain, a tax and investment expert based in Mumbai, Section 80TTB allows individuals who are 60 years or older and Indian residents for tax purposes to claim a deduction of 50,000 for the interest earned from Post Office, Bank, and Cooperative Society deposits within a year. This deduction applies to interest earned on savings deposits and fixed deposits as well.

Jain explained that this deduction covers interest from deposits of any kind with these entities, including savings bank interest, fixed deposit interest, and recurring deposit interest. Additionally, the deduction can be claimed for interest earned on deposits made under the Senior Citizen Saving Scheme, within the overall limit of 50,000.

Difference between Section 80TTA, and Section 80 TTB

Section 80TTA and Section 80TTB both provide deductions about interest income, even though with distinctions. Under Section 80TTA, individuals below the age of 60 years and Hindu Undivided Families (HUFs) are eligible for interest deductions up to 10,000 solely on savings accounts held in banks, co-operative banks, or post offices.

It's important to note that Section 80TTA does not extend its benefits to senior citizens.

Here are the eight key points:

1)Senior citizen means an individual resident who is of the age of 60 years or more.

2)Interest on bank deposits (savings or fixed)

3)Interest on deposits held in a cooperative society engaged in the business of banking, including a cooperative land mortgage bank or a cooperative land development bank

4)Interest on post office deposits

5) Banks cannot deduct any tax at source or TDS from the payment of interest on deposits of up to 50,000 to the senior citizens.

6)Since interest under Section 80TTB is exempt up to Rs. 50,000 is exempt, the resident senior citizens enjoy a higher limit of 50,000/- for TDS on interest under Section 194A

7)The amount of interest earned over 50,000 would attract the tax as per the applicable slab rate of senior citizens.

8)Interest income from company fixed deposits or bonds/NCDs will not qualify for relief under Section 80TTB.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

 

 

 

 

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ABOUT THE AUTHOR
Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
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Published: 14 Feb 2024, 08:56 AM IST
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