Income tax benefits for senior citizens on interest income from savings, fixed deposits — explained in eight points

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Section 80TTB of the Income Tax Act outlines the tax benefits that senior citizens can avail of regarding the interest income they receive from deposits. The Finance Budget 2018 introduced several benefits specifically targeted at senior citizens, one of which is the new provision -Section 80TTB.

According to Balwant Jain, a tax and investment expert based in Mumbai, Section 80TTB allows individuals who are 60 years or older and Indian residents for tax purposes to claim a deduction of ₹50,000 for the interest earned from Post Office, Bank, and Cooperative Society deposits within a year. This deduction applies to interest earned on savings deposits and fixed deposits as well.

Jain explained that this deduction covers interest from deposits of any kind with these entities, including savings bank interest, fixed deposit interest, and recurring deposit interest. Additionally, the deduction can be claimed for interest earned on deposits made under the Senior Citizen Saving Scheme, within the overall limit of ₹50,000.

Section 80TTA and Section 80TTB both provide deductions about interest income, even though with distinctions. Under Section 80TTA, individuals below the age of 60 years and Hindu Undivided Families (HUFs) are eligible for interest deductions up to ₹10,000 solely on savings accounts held in banks, co-operative banks, or post offices.

It's important to note that Section 80TTA does not extend its benefits to senior citizens.

1)Senior citizen means an individual resident who is of the age of 60 years or more.

2)Interest on bank deposits (savings or fixed)

3)Interest on deposits held in a cooperative society engaged in the business of banking, including a cooperative land mortgage bank or a cooperative land