The Income-tax Act of 1961 provides special benefits to senior citizens under sections such as 80TTB. This section was introduced in the 2018 Budget and offers a deduction of up to Rs 50,000 on interest income to people aged 60 and above. It aims to ensure a regular cash flow for senior citizens to meet their needs, as their income sources could be limited after retirement.

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What Is Section 80TTB?

According to the Income-tax Act, 1961, “Section 80TTB allows tax benefits on interest earned from deposits with banks, post office or co-operative banks.” The deduction allows for a maximum interest income of up to Rs 50,000 for the senior citizen. The interest earned on savings and fixed deposits are eligible for deduction under this provision.”

The section became operative on April 1, 2018. However, it is not applicable to the new tax regime, which is the default tax regime now. Tax benefits under 80TTB are not available if a senior citizen chooses the default tax regime. The benefit can be availed of only if one chooses the old tax regime.

What Are The Eligibility Requirements?

The only eligibility requirement is that the person should be a resident Indian and be 60 years old or older. Note that only resident senior citizens are eligible for this deduction and not the non-resident Indians, association of persons (AOP), body of individuals (BOI), or Hindu Undivided Family (HUF). Interest income from bank savings accounts, fixed deposits, cooperative societies, and post offices are eligible for this deduction.

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What Are The Documents Required?

To claim this deduction, one must have documents such as an interest certificate or a bank statement to substantiate the claim amount.

How Much Can Seniors Claim Under Section 80TTB?

Tax relief can be up to Rs 50,000 or the actual amount, whichever is lower. For example, if the interest amount (from savings, fixed deposit, and recurring deposit) is Rs 35,000, full interest can be claimed under 80TTB because Rs 35,000 is lower than Rs 50,000. But if the interest amount is, say, Rs 68,000, it is more than Rs 50,000. Then, Rs 50,000 can be claimed under 80TTB, and the balance of Rs 18,000 will be taxable.