The Section 80TTB of the Income Tax Act introduces valuable tax benefits for senior citizens, particularly concerning the interest income generated from deposits.
Enacted through the Union Budget-2018, this provision targets to relieve the tax burden on individuals aged 60 or older, who are Indian residents for tax purposes.
The introduction of Section 80TTB has ushered in significant advantages, allowing eligible individuals to claim a deduction of ₹50,000 on the interest earned from various deposits, including those in Post Offices, Banks, and Cooperative Societies, within a given year.
Eligibility: Individuals aged 60 or more, classified as senior citizens.
Applicable Deposits: The deduction encompasses interest from savings deposits, fixed deposits, and recurring deposits.
Senior Citizen Saving Scheme: The deduction extends to interest earned on deposits under the Senior Citizen Saving Scheme, within the overall limit of ₹50,000.
While both Section 80TTA and Section 80TTB provide deductions on interest income, they cater to distinct categories of taxpayers.
Section 80TTA is tailored for individuals below 60 years and Hindu Undivided Families ( HUFs ), offering deductions up to ₹10,000 solely on savings accounts held in banks, co-operative banks, or post offices. Notably, Section 80TTA does not extend its benefits to senior citizens.
6 Points for Senior Citizen to Remember
1. Senior citizen definition: Individuals aged 60 or more qualify as senior citizens.
2. Covered Interests: Deductions apply to interest on bank deposits ( savings or fixed ), cooperative society deposits, and post office deposits.
3. TDS Exemption: Banks cannot deduct TDS from interest payments up to ₹50,000 to senior citizens.
4. TDS Limit: The TDS limit for interest under Section 194A is extended to ₹50,000, given the exemption under Section 80TTB.
5. Tax Applicability: Interest exceeding ₹50,000 attracts tax as per the applicable slab rate for senior citizens.
6. Exclusions: Interest income from company fixed deposits or bonds/NCDs does not qualify for relief under Section 80TTB.
Understanding and leveraging the provisions of Section 80TTB can significantly benefit senior citizens, providing a substantial deduction on interest income from various deposits. This knowledge empowers individuals to optimize their tax liabilities and make informed financial decisions.
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