During the Budget 2018, Finance Minister inserted a new Section 80TTB. This allows a tax deduction of up to Rs.50,000 with respect to interest income from FDs held by senior citizens. Let see the features of this section.
FDs or fixed instruments are the major backbones of many of the senior citizens. However, the majority of these fixed instruments are not so tax efficient. Hence, to give some relief to senior citizens Finance Ministry introduced this new Section 80TTB.
This amendment is effective from Financial Year 2018-19 or Assessment Year 2019-20.
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Who is eligible to claim the deduction under Section 80TTB?
Senior Citizen who is holding the FDs with Banks, Co-operative Banks and also in Post Offices and earning the interest income from such deposits are eligible to avail the deduction under Section 80TTB.
Here, the meaning of senior citizen is an individual resident in India who is of the age of 60 Yrs or more at any time during the relevant financial year.
Firms, an association of persons or a body of individuals are not allowed to claim the deduction under Section 80TTB.
Also, if a senior citizen claimed the deduction under Section 80TTA (all individuals can claim up to Rs.10,000 deduction against the interest income received from a savings account), then they are not allowed to claim the deduction under Section 80TTB.
How much can we claim as the deduction under Section 80TTB?
As I mentioned above, if you are a senior citizen who is holding the FDs with Banks, Co-operative Banks and also in Post Offices and earning the interest income then you are eligible to claim up to the maximum of Rs.50,000 in each financial year.
The maximum deduction allowed under Section 80TTB is Rs.50,000. Hence, assume that you have Rs.45,000 as an interest income of FDs. In such a situation, you are allowed to claim only the actual interest income (because the actual interest income is less than the maximum limit available under Section 80TTB).
Same way, assume that you have Rs.60,000 as an interest income from all FDs together. In that situation, as I mentioned the maximum deduction allowable for deduction under Section 80TTB is Rs.50,000, you can claim Rs.50,000 as the deduction. Rest of the Rs.10,000 will be your taxable income.
Difference between Section 80TTA and Section 80TTB
There is a slight difference between Section 80TTA and Section 80TTB. Hence, many get confused between these two income tax sections.