Deduction under section 80TTB of Income Tax Act

Deduction under section 80TTB was introduced for the first time in Budget 2018. Section 80TTB provides a deduction to senior citizens towards interest earned on deposits. The provisions of the same are explained hereunder –

Persons eligible for claiming deduction under section 80TTB

Deduction under section 80TTB is available only to a senior citizen. The explanation to section 80TTB defines ‘senior citizen’ as an individual, being resident in India, who is of 60 years or more at any time during the relevant previous year.

Type of income towards which deduction is available under section 80TTB

Any interest income earned by a senior citizen on deposits is allowable as a deduction under section 80TTB. The deposits should be held with any of the following –

• A banking company (i.e. banks) to which the Banking Regulation Act applies (it also includes banks referred to in section 51); or
• A co-operative society being engaged in carrying on banking business (it also includes a co-operative land development bank or a co-operative land mortgage bank); or
• A post office as defined under section 2 (k) of the Indian Post Office Act.

Section 80TTB (2) specifically states that any interest income earned from the savings account held by the firm or Association of Persons (AOP) or Body of Individual (BOI) shall not be allowed as deduction under section 80TTB to partners of the firm or members of the association or individual of the BOI.

Maximum amount of deduction available under section 80TTB

The maximum amount of deduction available under section 80TTB is lower of the following –

• The whole of the interest income; or
• INR 50,000.

In simple terms, if the eligible interest income is less than INR 50,000, then, the entire interest income would be allowed as deduction. However, in case the interest income is more than INR 50,000, then, only INR 50,000 would be allowed as a deduction under section 80TTB.

Understanding the difference between section 80TTA and section 80TTB

Both section 80TTA and section 80TTB provides deduction towards interest income. The following table would help the reader to understand the basic difference between section 80TTA and section 80TTB –

Frequently Asked Questions (FAQ) –

Q.1 What is Section 80TTB?

Ans: Section 80TTB of the Income Tax Act provides a deduction to a senior citizen in respect of interest income earned on deposits with a bank or a co-operative society or a post office. The maximum amount of deduction available in INR 50,000.

2. Does 80TTB include FD interest?

Ans: Yes, section 80TTB includes FD interest. Meaning thereby that interest earned on fixed deposits by a senior citizen is allowable as a deduction under section 80ttb.

3. Is FD interest taxable for senior citizens?

Ans: FD interest earned by the senior citizens is taxable, however, section 80ttb provides deduction towards the same maximum up to INR 50,000.

4. Is 80TTB part of 80C?

Ans: Deduction available under section 80TTB is over and above the deduction available under section 80c.