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80TTB is a new income tax act that was introduced in budget 2018-19 under the Income-tax Act, 1961. As part of this new act, the super senior and senior citizens in India can claim tax deduction of up to 50,000 rupees on their interest income that they earn in a single year. 80TTB act permits the senior citizens above the age of 60 years and with permanent residency of India as eligible under this plan to enjoy the tax benefits.
Below are the key aspects that you need to know about this new income tax act under Section 80TTB before you start claiming deduction under the same.
One rule about claiming deductions under section 80TTB is that you can claim deductions on interest on the money deposited or saved in a bank, post office or a co-operative society engaged in commercial banking service.
As per this rule, the senior citizens can claim interest on their savings in a bank account as well as in their fixed and recurring deposits that are kept in a bank or post office etc. are only eligible for tax deduction.
Moreover, the senior citizens can also claim deductions on other types of deposits where they earn interest. Some such deposits include post office savings accounts like:
Thus, 80TTB of income tax act exclusively mentions the sources of interest income on which deduction can be claimed. And this makes it clear that the interest earned from other sources like Company FD, Bonds, Debentures etc., are not eligible for deduction under this plan.
For calculating the deduction, the total eligible interest incomes are added to Senior Citizen’s gross total income and then the appropriate tax is levied as per the applicable rates under the section of 80TTB of income tax.
Another key aspect of the Section 80TTB of Income Tax Act is that the senior citizens who claim deduction under this act cannot claim deduction under the earlier act of Section 80TTA of Income Tax.
Section 80TTA permits tax deduction of over Rs 10,000 to every citizen earned on the total interest income saved in their savings account in different post-offices or banks in a single financial year.
Though this deduction was earlier offered to everyone despite their age, but now the senior citizens have been excluded from this benefit. So, earlier everyone including people below 60 years, above 60 years and well as the citizens in the category of super senior people were allowed to enjoy deduction under this section, which is now not available as effective from FY 2018-19.
This is because the senior and super senior Indian citizens can now avail tax benefits under section 80TTB, which allow the super senior and senior citizens in India to claim tax deductions of up to 50,000 rupees on their interest income that they earn in a single year
Another important aspect of 80TTB Deduction is that to be eligible to claim this tax deduction the senior citizens must have citizenship of India. So, 80TTB is available to the residents of India only as indicated by the Income-tax Act. So, NRIs or non-resident Indians who are above the age of 60 years are not allowed to claim deduction under 80TTB. Hence, NRI senior citizens can claim the tax benefits or deduction under section 80TTA, which allow them to earn up to Rs 10,000 deduction for interest earned from their respective savings accounts.
Here are the key differences between Section 80TTA and Section 80TTB as stated below:
From the above information, you now know how the new section of 80TTB of income tax act is benefitting the elderly including senior and super senior citizens of the country by allowing them to claim tax deduction of up to 50,000 rupees on their interest income.
However, it is also important to note that by availing the new tax deduction under section 80TTB, the citizens have to forgo some deductions under different sections of Income Tax, such as, section 80C, section 80D, and 80TTA.
So, citizens availing deduction under the new tax regime cannot avail deductions under section 80TTA/80TTB.
Also Read: Tax benefit in Health Insurance Under Section 80D | Section 115BAC of Income Tax Act | How Section 80C Of The Income Tax Act Works | Section 139 (1) of the Income Tax Act | Income Tax Saving Investments Under Section 80EE, 80C, 80D
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