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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90 Comments

  1. Achintya Biswas says:

    I am a senior citizen ( 72 years). I receive interests from post office term deposit , bank senior citizen scheme and bank FDs. Can I get relieve of Rs.50,000/- as per 80TTB.

    1. Kanwaljit Singh Dhunna says:

      Yes, You Can.

      Under section 80TTB, interest received from deposits held with a bank, a co-operative society engaged in banking or with a post office can only be claimed as deduction.

      So interest earned on savings accounts and deposits (such as fixed deposits or recurring deposits) held with any of these three entities will be eligible for deduction under this section. Further, interest earned on other types of deposits with post offices such as Senior Citizen Savings Scheme accounts, post office time deposits, 5-year recurring deposits, NSC and Post Office Monthly Income Schemes will also be eligible for deduction

  2. PADMANABHAN says:

    I am a senior citizen. I have interest income from fixed deposits from Nidhi Companies and NBFCs. Can you please clarify whether this 50,000 deduction is admissible for the interest income from the above sources ? Thanks.

  3. M Kumar says:

    Annual Income of Sr. citizen from FDs is Rs.3,50,000 which should not attract tax. Can I give form 15H to bank so that TDS is not deducted as per 80TTB? Or Bank will deduct TDS and I will have to claim while filing return?

  4. VIJAY MAHESHWARI says:

    I am a 65 year old person holding a FD in DHFL yielding around Rs. 2 lakhs per annum. Can the interest upto Rs, 50,000 be claimed for rebate u/s 80TTB

  5. तौक़ीर अहमद says:

    ये amendment 1 अप्रैल 2019 से लागू होगा तो Aasessment Year 2019-20 कैसे हो गया…???

  6. Srinivasan says:

    Can someone clarify if this 50K interest exemption is applicable only for resident senior citizens or all senior citizens even non-resident?

  7. R Chandrasekharan says:

    Please give your considered opinion on the scope oF sec 80TTB regarding exemption of interest of upto rs 50000:
    Will fd interest from Sundaram finance qualify for section 80TTB

    1. Raja says:

      The exemption is made under section 194A. It deals with interest other than interest
      on securities. Hence if FD interest from Sundaram finance or any other NBFC falls under section 194A it is also eligible.

      1. V Sivaprasad says:

        Section 80TTB introduced from Financial Year 2018-19 allows a deduction up to Rs.
        50,000 in respect of interest income from deposits held by senior citizens from his gross
        total income if it includes any income by way of interest on deposits (not being time
        deposits) in a savings account, a deduction amounting to:
        (i) in a case where the amount of such income does not exceed in the aggregate fifty
        thousand rupees, the whole of such amount; and
        (ii) in any other case, fifty thousand rupees.
        The deduction is available if such savings account is maintained in a
        (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);
        (b) co-operative society engaged in carrying on the business of banking (including a
        co-operative land mortgage bank or a co-operative land development bank); or
        (c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act,
        1898.
        For this section, ―senior citizen‖ means an individual resident in India who is of the age of
        sixty years or more at any time during the relevant previous year.
        This is an extract of Income Tax Department Circular 01/2019 dated 01.01.2019 which says that Rs.50000 exemption is available to Senior Citizens only on Interest from Savings Bank account and NOT Term deposits.
        Kindly calrify

      2. Kanwaljit Singh Dhunna says:

        No, It is not applicable if FD interest from Sundaram finance or any other NBFC. It only applies to a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act)

    2. Raja says:

      As per section 80TTB interest from banks, cooperative banks and post office, (on SB and term deposits together), upto Rs.50000(fifty thousand) exempted. It does not include interest from Sundaram Finance Ltd, as it is not a bank or cooperative bank or post office.

  8. Mahavir Pd Jaain says:

    I am a senior citizen and have investment in Post Office SCSS and earning intereest income on quarterly basis. Shall I gt the benefit of sec 80TTB for the interest earned under SCSS.

  9. DEEPAK HAMBIR says:

    I am senior citizen having investment in Fixed deposits of company deposits. shall i get the benefit of 80TTB for interest on FD of Company deposits

  10. Krishnan S says:

    it needs to be clearly clarified who are all will
    be treated as pensioners ; there are vaerious
    types of pension , like government pension ,
    PF pension , Annuity Pension from LIC ,
    P M V V Y Pension (announced exclusively for senior citizens ) and different pen sion schemes
    from L I C ? out of these , who all can claim
    exemptioin of interest income of upto Rs.50,000/-

  11. Sateesh Chowdari says:

    As per 80TTB section is there mandatory for the senior citizen customer to visit to bank and submit the declaration to get the benefit of the section 80TTB? or the Bank has to do automatically. Please clarify..

  12. Ashok Sagajkar says:

    I am sr. Citizen 65 age .i receive intrest on investment scss 2004.& my wife is also sr.citizen she also receive interest in scss 2004 .Both are qualify u/s 80 TTB deduction.

  13. K O THOMAS says:

    My interest from terms deposit is Rs. 60000. Can I get tax exemption for the Rs. 50000 under sec. 80 TTB. I am a senior citizen

  14. Kashmalan K. Doctor says:

    There is an article in “MoneyLife Advisory” dt. June 3, 2018 stating that int. on Sr.Citizen’s Savings Scheme is covered under Section 80TTB. Can anybody confirm the same? Can a deposit under SCSS be treated as deposit with a Banking Co.?

  15. Malay Kumar Chattopadhyay says:

    I am a senior citizen aged 73+.Can I get consesion u/s 80TTB on my POMIS interest in the assesment year 2019-20?

  16. 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.

  17. 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?

  18. 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?

  19. 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.

  20. 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?

  21. 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?..?

    1. 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.

  22. Dhiraj says:

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

  23. 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…..

  24. 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

    1. L.venkata ravi says:

      Ya , definitely,.but he should not avail benefit of 80tta,and he should be senior citizen ,then he get deduction up to 50000rs in total income,remaining income should be taxable…

    2. L.venkata ravi says:

      Ya,but he should not avail benefit of sec 80tta and he should be senior citizen,then he will get 50000rs deduction from total income…., remaining income should be taxable…

  25. 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 .

    1. 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.

    1. 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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