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    Deduction in Respect of Interest Income From Deposits For Senior Citizens (Section 80TTB)

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    arohi
    The document discusses Section 80TTB of the Indian Income Tax Act, which provides tax deductions for interest income earned by senior citizens from bank deposits. Key points: - Section 80TTB allows senior citizens to deduct up to Rs. 50,000 of interest income from savings accounts, fixed deposits, post office accounts from their total income. - It is effective from financial year 2018-19 and applies to interest income of senior citizens aged 60+. - An example shows how the deduction helps a senior citizen pay no income tax, while a similarly earning normal taxpayer has to pay taxes.

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    Deduction in Respect of Interest Income From Deposits For Senior Citizens (Section 80TTB)

    Uploaded by

    arohi
    25 views4 pages
    The document discusses Section 80TTB of the Indian Income Tax Act, which provides tax deductions for interest income earned by senior citizens from bank deposits. Key points: - Section 80TTB allows senior citizens to deduct up to Rs. 50,000 of interest income from savings accounts, fixed deposits, post office accounts from their total income. - It is effective from financial year 2018-19 and applies to interest income of senior citizens aged 60+. - An example shows how the deduction helps a senior citizen pay no income tax, while a similarly earning normal taxpayer has to pay taxes.

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    It's a tax document

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    80 TTB

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    The document discusses Section 80TTB of the Indian Income Tax Act, which provides tax deductions for interest income earned by senior citizens from bank deposits. Key points: - Section 80TTB allows senior citizens to deduct up to Rs. 50,000 of interest income from savings accounts, fixed deposits, post office accounts from their total income. - It is effective from financial year 2018-19 and applies to interest income of senior citizens aged 60+. - An example shows how the deduction helps a senior citizen pay no income tax, while a similarly earning normal taxpayer has to pay taxes.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    25 views4 pages

    Deduction in Respect of Interest Income From Deposits For Senior Citizens (Section 80TTB)

    Uploaded by

    arohi
    The document discusses Section 80TTB of the Indian Income Tax Act, which provides tax deductions for interest income earned by senior citizens from bank deposits. Key points: - Section 80TTB allows senior citizens to deduct up to Rs. 50,000 of interest income from savings accounts, fixed deposits, post office accounts from their total income. - It is effective from financial year 2018-19 and applies to interest income of senior citizens aged 60+. - An example shows how the deduction helps a senior citizen pay no income tax, while a similarly earning normal taxpayer has to pay taxes.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Deduction in respect of interest income from deposits for

    senior citizens (Section 80TTB)

    More often than not, senior citizens live on their savings and have
    no regular inflow of cash. Thus, it is absolutely essential to provide
    them with some extra benefits.
    Accordingly, some amendments have been made in the Finance
    Budget, 2018. Let’s have a look at them below!

    What is Section 80TTB?


    It is a provision for senior citizens (aged 60+) who can claim a
    specified amount as a deduction from the gross total income as a
    deduction for a financial year.
    This amendment is effective from 1st April 2019 and will,
    accordingly, apply in relation to the financial year
    2018-19(assessment year 2019-20 ) and subsequent financial
    years.

    What is meant by specified income?


    Specified Income can be any of the following sources :
    ● Interest on bank deposits, both savings as well as fixed
    ● Interest on deposits held in co-operative societies
    ● Interest on deposits in post offices

    How much deduction can be availed?


    A sum of Rs. 50,000 or amount of specified income, whichever is
    lower, can be availed as a deduction from the gross total income.

    Can a person avail deduction under both Section 80TTA and


    80TTB?
    With the introduction of Section 80TTB for senior citizens,
    deductions under Section 80TTA can no longer be availed by them.
    Section 80TTA vs 80TTB

    Point of difference Section 80TTA Section 80TTB


    Who is it for? Individuals and HUF Exclusively for
    except for senior senior citizens
    citizens
    Specified income Interest on a savings Interest on all types
    account and other of deposits
    non-time deposits
    only
    Maximum Rs. 10,000 Rs. 50,000
    deduction available

    Example:
    It is already known that senior citizens already enjoy a much higher
    exemption limit compared to normal taxpayers.
    Now, we will have a look at how Section 80TTB further helps senior
    citizens in saving taxes.

    Let us have a look at the following table that gives details of income
    for a person :
    Source Income
    Savings interest 5,000
    FD interest 2,00,000
    Other income 1,00,000
    Gross total income 3,05,000

    Now, for comparing the benefits, we assume that this is the case for
    both a normal taxpayer as well as a senior citizen.
    Let’s have a look at the deductions applicable to them :
    Section applicable Normal taxpayer Senior Citizen
    80TTA 5,000 NA
    80TTB NA 50,000

    Hence, the net taxable income for the normal taxpayer is Rs.
    3,00,000 while that for the senior citizen is Rs.2,55,000 (after
    deductions).
    Since the earning of the senior citizen is less than the minimum
    taxable income, the income tax payable by the senior citizen is nil
    while the normal taxpayer has to pay some taxes!

    This is how Section 80TTB helps senior citizens to further save


    some taxes.

    Legal text :

    Section - 80TTB, Income-tax Act, 1961-2018

    Following section 80TTB shall be inserted after section 80TTA by the Finance Act, 2018,
    w.e.f. 1-4-2019:

    Deduction in respect of interest on deposits in case of senior citizens.


    80TTB. ​(1) Where the gross total income of an assessee, being a senior citizen, includes
    any income by way of interest on deposits with—
    (​a​)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);
    (​b​)a 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 (6 of
    1898),
    there shall, in accordance with and subject to the provisions of this section, be allowed, in
    computing the total income of the assessee, a deduction—
    (​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.
    (2) Where the income referred to in sub-section (1) 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.
    Explanation​.—For the purposes of 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.

    Source : Income Tax India. (2019). ​Deduction in respect of interest on deposits in case of
    senior citizens​. [online] Available at: ​https://www.incometaxindia.gov.in/​ [Accessed 10
    January 2019].

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