Higher Deduction in respect of interest income to senior citizen under section 80TTB

At present, a deduction upto Rs 10,000/- is allowed under section 80TTA to an assessee in respect of interest income from savings account. It is proposed to insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases.

This amendment is effective from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

Particulars Old Provision of section 80TTA
New Provision of Section 80TTB
Deduction  for senior citizens in respect of Interest income Deduction Allowed upto Rs.10000/- for Saving Account Interest u/s 80TTA Deduction allowed upto Rs.50,000/- for FDR and
Saving Interest u/s 80TTB

Section 194A also been amended by Budget 2018 so as to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs 10,000/- to Rs 50,000/-.

This amendment takes effect, from 1st April, 2018.

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Extract of Relevant Clause 29, 30 & 47 of Finance Bill 2018

Clause 29 of the Bill seeks to amend section 80TTA of the Income-tax Act relating to deduction in respect of interest on deposits in savings account.

The said section, inter alia, provides that where the gross total income of an assessee, being an individual or a Hindu undivided family, includes any income by way of interest on deposits in a savings bank account with certain entities.

It is proposed to amend the said section so as to provide that the assessee referred to in section 80TTB shall not be eligible for the benefit of deduction under this section.

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.

Clause 30 of the Bill seeks to insert a new section 80TTB in the Income-tax Act relating to deduction in respect of interest on deposits made by senior citizens.

The proposed new section, inter alia, provides that where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with a banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act) or a co-operative society engaged in the business of banking (including a co-operative land mortgage bank or a co-operative land development bank) or a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898, a deduction of an amount up to fifty thousand rupees shall be allowed.

It is further proposed to provide that where the income referred to in this section is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

It is also proposed to define the expression “senior citizen”.

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.

Clause 47 of the Bill seeks to amend section 194A of the Income-tax Act relating to interest other than “interest on securities”.

The said section, inter alia, provides that where the amount of income or, as the case may be, the aggregate of the amounts of income credited or paid or likely to be credited or paid during the financial year by the person, does not exceed ten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution, referred to in section 51 of that Act); or co-operative society engaged in carrying on the business of banking; or on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; or five thousand rupees in any other case, no tax at source is required to be deducted.

It is proposed to amend the said section so as to provide that in case of senior citizen, the said interest amount is increased to fifty thousand rupees.

It is also proposed to define the expression “senior citizen”. These amendments will take effect from 1st April, 2018.

Republished with amendments

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49 responses to “Section 80TTB: Rs. 50000 deduction on interest income to senior citizen”

  1. Pawan says:

    1.Please clarify if the interest received from SCSS 2004 qualifieS for 80TTB relief.
    2. ALSO, Whether pension payout from PMVVY would qualify for rebate under 80TTB.

  2. B.M.Baliga says:

    I am senior citizen with estimated income from all sources is 500000.
    a. Can i get benefit of section 80TTB of Rs 50000?
    b. If i don’t submit i5G form, will TDS be cut /not. If TDS is cut then can i get refund in income tax return taking benefit of section 80TTB?

  3. A. Venkateswara Rao says:

    Is the Fixed Medical Allowance paid along with the pension to central government pensioner is exempt from income tax?

  4. ABHAS KUMAR SAMANTA says:

    A senior citizen estimated interest income from bank fd Rs 3.5 lakh, as per u/S 80TTB claiming deduction for Rs 50.00 thousand, his taxable income will be Rs 3.00 lakh in fy 2018-19. Now, my question are –
    1)”Is he/she will be eligible for submission of 15H in bank for the financial year 2018-19?”
    2)Estimated total income in 15H will be 3 lakh or 3.5 lakh?

  5. Kulwant says:

    Will a senior citizen account holder , who earns interest more than Rs. 10000 but less than Rs. 50000 from a bank deposit, have to specifically request the bank not to deduct the TDS or the bank will do it on their own. The banks do have all the data of the account holders including their date of birth.

  6. V.N.Devarajan says:

    For Finacial year 2017-18 will this 80 TTB is applicable?

  7. V.N.Devarajan says:

    Will the section 80 TTB applicable for FY 2017-18?

  8. P Vazirani says:

    So as per section 80 TTB the income including interest income from banks the income upto Rs.3,50,000/- become tax free income?

  9. Ramdevsinh K.Gohil says:

    I have deposited Rs. 1500000 in Post Office in a Senior Citizen saving scheme and getting annually Rs 130000/-.as interest. Can I eligible benefits of section 80TTB?

  10. Nirav Solanki says:

    My fathet is 61.
    He will get 70000 interest from Mis Post. Can he claim 50000 … Under 80ttb???

  11. Suresh kapoor says:

    SBI Noida has deducted tax from pension on April 03 without giving benefit of rule 80ttb where Rs 50000 /- exemption is to be given to Seniorr Citizen. From tax deduction. Pl clarify?..?

    • A. Varma says:

      New Section 80 TTB is applicable on interest threshold limit for claiming TDS exemption. 80 TTB is not available for not deducting TDS on pension income.

  12. SHYAM says:

    Whether interest on mutual fund eligible for 80TTB Deduction?

  13. Dhiraj says:

    Will interest from deposits made with Non Banking Finance Companies, like Bajaj Fin., Deewan Housing Fin., etc. be covered under Sec 80TTB?

  14. JAGDISH KUMAR SHARMA says:

    IS REINVESTMENT OF INTT EARNED ON NSC
    COME UNDER SECTION 80 TTB?

  15. ARUP KASYAPI says:

    Whither any non senior citizen will get the benefit u/s 80TTA in the assessment year
    2019-20

  16. Puneet Jain says:

    INTEREST ON RD OF POST OFFICES WILL ALSO BE INCLUDED IN DEDUCTION OF 80TTB?

  17. CHANDRAKANT RONGHE says:

    WHETHER THIS AMOUNT OF RS. 50000/- EARNED AS INTEREST ON FDs AND SAVINGS IS EXEMPTED FROM TAX UNDER SEC 80TTB… THAT MEANS A SR. CITIZEN CAN AVAIL EXTRA BENEFIT BY THIS PROVISION… PLEASE CLARIFY…..

    • jyotirmay Biswas says:

      Kindly clarify if interests earned on FDs in Banks,LIC’PMVVY and SCSS in Post Office are covered under sec80TTB

      • Nirav Solanki says:

        Is post MIS interest will also get 80ttb benefit??
        Ex. My father earns 70000 from Mis Post.
        His age is 61

  18. Sachin Puri says:

    Is interest received from SCSS deposit is also covered under 80TTD?

  19. Venkat says:

    TG is not replying to queries on schemes covered under Section 80TTD exemption. Are we to understand that there is no clarity yet

  20. Venkat Tata says:

    Is interest earned from Senior Citizens Savings Scheme, NSC, LIC Annuity exempt under Section 80 TTD.

  21. Ashok says:

    LIC से SENIOR CITIZEN को
    प्राप्त ब्याज भी 50000/-
    की छूट मे आता है क्या ?????

  22. PRAKASH KUMAR says:

    Suppose income from interest is Rs.200000 then wheather incometax is calculated on Rs.150000 (after dedicting Rs.50000) or on Rs.200000

  23. Suresh Kumar says:

    finance minister making fool to all service class/middle class person by their budget 2018. He gains more tax by applying cess but giving nothing to employee.on the other hand making fool to women by reducing EPF deduction 12% to 8% making large
    income tax payers as net income will increase simultaneously increasing tax laiblity.A totally flop
    budget .

  24. Rakeshwar dass says:

    Is this tax deduction applicable on interest received LIC pension Yojana?

  25. mahesh Singh says:

    Is it applicable for those cases where income from interest is 3 lakhs and above.
    Please clarify.

  26. venkatramana says:

    Sec80TTB will be effective from 01 04 2018 and not 01 04 2019 as given the above article.

    • TG Team says:

      Please read full sentence. In income tax there is concept of assessment year so it is applicable from Assessment Year starting on 1st April 2019 i.e. applicable from FY 2018-19.

  27. venkatramana says:

    Sec 80TTB will be efective from 01 04 2018 .It is wrongly given in the article as 01 04 2019.Pl check up.

  28. abdul says:

    Verily expected Tax rate slab not done…it is really not a convenient budget for middle class people

    • D R SHARMA says:

      Is it applicable for those cases where income from interest from FDs and SAVING is 2 lakhs and above.
      Please clarify. or where income is more than 50000 then he will get only benefit of 80TTA only.

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