Section 80TTB Of The Income Tax Act

Finance Minister Arun Jaitley introduced a new section - Section 80TTB to provide tax rebates for senior citizens on their interests earned from their bank or post office deposits. This rebate will be available to those taxpayers who are above 60 years of age and have interest income from deposits in banks, post offices, etc. The maximum deduction allowable under Section 80TTB is Rs 50,000. The deduction under Section 80TTB is over and above the deductions available under Section 80C, Section 80D, and Section 80E. Taxpayers can claim the deduction by submitting Form 10I to the employer in case they are salaried or during filing income tax returns if they are self-employed.

What is Section 80 TTB?

In the Finance Bill, 2019, Finance Minister Arun Jaitley introduced a new section - Section 80TTB to provide tax rebates for senior citizens on their interests earned from their bank or post office deposits.

Section 80TTB is a deduction from taxable income. The benefit of this deduction will be available to senior citizens who have retired from employment before April 1, 2004, and continue to reside in India after retirement.

Maximum Deduction Allowable

The maximum deduction allowable under Section 80TTB is Rs 50,000. This means that if you have a total income of more than Rs 50,000 then your entire income will be subject to tax at the highest rate of tax slab and hence you cannot claim any deductions under sections 80C, 80D, or 80E.

Section 80TTB allows you to claim an increase in benefit amount under section 80C (or E) by adding the amount claimed as a deduction under Section 80TTB with your previous year’s total deductions for the same purpose.

The Deduction Under Section 80TTB

Section 80TTB of the Income Tax Act is available only for senior citizens. The deduction under Section 80TTB is over and above the deductions available under Section 80C, Section 80D, and Section 80E.

Section 80TTB is not available for minor children, parents of minor children, or senior citizens who have income from other sources such as interest-earning bonds, etc., though they may be eligible to claim deduction under section 11(3) or section 14(1).

Claimining the Deduction

Taxpayers can claim the deduction by submitting form 10i to the employer in case they are salaried or during filing income tax returns if they are self-employed.

1. Form 10I is available with the employer.

2. The taxpayer can submit Form 10I to the employer in case they are salaried or during filing income tax returns if they are self-employed.

Section 80TTB Helps Senior Citizens

Section 80TTB of the Income Tax Act helps senior citizens avail more tax exemptions on their bank interests.

The Act clarifies that any interest accrued or earned by a senior citizen in his/her bank account during the financial year is exempt from tax as long as it is released to him/her before 31st March of every subsequent year.

This benefit can be availed only by those who have been residing in India for at least three years before applying for it, and have not claimed any other exemption under Section 80TTA (Taxation at source) or Section 80TDB (Exemption from deduction at source).

Conclusion

For those senior citizens who are salaried, this new section is a welcome relief. The benefits of the Section 80TTB will be available only to those who have interest income from deposits in banks, post offices, etc., under Section 80C. This means that senior citizens will not be able to avail of any of the other tax exemptions available under Section 80C and Section 80D. Senior citizens can claim for deduction of Rs 50,000 on their bank or post office deposits under Section 80TTB without any limit on income level or other requirements as long as they meet all other conditions mentioned above.

FAQs

How do I claim a Section 80TTB deduction?

By filing your income tax return, you can claim a deduction under Section 80TTB. First, put the money in your income under 'Income from other sources,' and then claim Section 80TTB deduction.