New IT Section 80TTB provides for a higher deduction of upto Rs. 50,000 for interest on savings/ term deposits with Bank/ Post Office, in the case of resident individuals of 60 years or more (senior citizens), from FY 2018-19/ AY 2019-20 and onwards
Section 80TTB of Income Tax Act, 1961 has been inserted by the Finance Act, 2018, which provides for a higher deduction, in the case of Senior Citizens (i.e. resident Individuals of age 60 years or more during relevant previous year), of upto Rs. 50,000 in respect of interest income earned from savings/ term deposits maintained with a Bank or Post Office, from FY 2018-19/ AY 2019-20 and onwards.
It should be noted that such Senior Citizen assessees are not eligible for deduction under Section 80TTA.
80TTB Deduction Limit (maximum Rs. 50,000)
80TTB deduction can be availed upto a maximum of Rs. 50,000, i.e. Interest Income on Savings/ Term Deposits during the relevant Previous Year or Rs. 50,000 whichever is minimum.
In any case the deduction under Section 80TTB is over and above the deduction limit specified in Section 80C (i.e. Rs. 150,000).
80TTB Deduction for Interest on Savings/ Term Deposits
80TTB deduction is available in respect of interest income of Senior Citizens from savings/ term deposits maintained with any Bank/ Banking Company, Co-operative Bank or Post Office.
Eligible Persons for Claiming 80TTB Deduction
80TTB deduction is applicable for persons who fall in the category of Senior Citizen Individuals (i.e. resident individuals of age 60 years or more during the relevant previous year). All other persons, like HUF, Firms, Companies, etc. are not allowed/ eligible to claim this deduction.
Text of Section 80TTB* of Income Tax Act, 1961 falling under CHAPTER VIA (Deductions to be made in computing total income)
Section 80TTB: Deduction in respect of interest on deposits in case of senior citizens
1) Where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with:-
(a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
(c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),
there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction:-
(i) in a case where the amount of such income does not exceed in the aggregate fifty thousand rupees, the whole of such amount; and
(ii) in any other case, fifty thousand rupees.
(2) Where the income referred to in sub-section (1) is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
Explanation: For the purposes of this section, “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.
* Section 80TTB has been inserted by the Finance Act, 2018, applicable w.e.f. 1-4-2019.