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

  1. 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/-

  2. 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..

  3. Ramamurthy says:

    Deposits under PMVV Yojana scheme .is it eligible for deduction under sec.80TTB

  4. 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.

  5. 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

  6. 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.?

  7. Malay Kumar Chattopadhyay says:

    Whether POMIS interest covers u/s 80TTB for sr. citizens ?

  8. 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?

  9. R.VENKATASUBRAMANIAN. says:

    Whether interest from RD will be exempt under this section?

  10. 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.

  11. 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?

  12. A. Venkateswara Rao says:

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

  13. 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?

  14. 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.

  15. V.N.Devarajan says:

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

  16. V.N.Devarajan says:

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

  17. 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?

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