The government introduced several tax benefits for senior citizens in the 2018 Union Budget to alleviate the burden of high healthcare costs and ensure financial security and ease of living. To implement the changes, it amended Section 80TTA to introduce Section 80TTB in the Income Tax Act. Section 80TTB offers significant tax relief to senior citizens who depend on interest income from fixed deposits and other fixed-income instruments.

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For instance, it allows deductions on interest income up to Rs 50,000 in a financial year. The interest income could be from banks, co-operative societies, or post office deposit accounts.

To avail of this deduction, they can simply submit their PAN card, the interest certificate and the bank statement for the financial year. No other documents are required.

How Is Section 80TTB Applied?

Any senior citizen who is 60 years or older and a resident of India can avail of the Section 80TTB benefit under the Income Tax Act of 1961. This benefit allows deductions from their gross total income in a financial year starting April 1, 2018. However, it is available only if the individual leaves the default tax regime under section 115BAC(1A).

Exception

However, Section 80TTB deduction is not available for partners or members of an Association of Persons (AOP) or Body of Individuals (BOI) holding specified deposits in a partnership firm, when computing their total income.

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Section 80TTA and Section 80TTB

Section 80TTA offers interest deductions up to Rs 10,000 on savings accounts held in banks, co-operative banks, or post offices for taxpayers below 60 years old or to a Hindu Undivided Family (HUF). However, due to the introduction of Section 80TTB exclusively for senior citizens, the deduction under Section 80TTA is no longer available. However, in 80TTB, deductions of up to Rs 50,000 are available to them.

Furthermore, Section 115AC of the Income Tax Act provides special relief to non-resident Indians (NRIs) on income from foreign assets and investments in specified instruments. It offers concessional tax rates, or reduced rates on certain incomes such as interest, dividends, and capital gains, to incentivise NRIs to invest in India by providing favourable tax treatment.

The government also provides various other benefits to senior citizens, such as higher deductions for medical expenses, higher interest rates for bank deposits and investments in fixed-income instruments, and a higher income exemption limit.