October 21, 2020

Itax Software

Income Tax Software

Download Automated All in One TDS on Salary for Govt & Non-Govt Emplyees for F.Y.2018-19 with Section 80TTB – Rs.50,000 deduction for Senior Citizens

During the Budget 2018, Finance
Minister inserted a new Section 80TTB. This allows a tax deduction of up to
Rs.50,000 with respect to interest income from FDs held by senior citizens. Let
see the features of this section.

FDs or fixed instruments are the major backbones of
many of the senior citizens. However, the majority of these fixed instruments
are not so tax efficient. Hence, to give some relief to senior citizens Finance
Ministry introduced this new Section 80TTB.
This amendment is effective from Financial Year
2018-19 or Assessment Year 2019-20.

Who is
eligible to claim the deduction under Section 80TTB?

Senior Citizen who is holding the FDs with Banks,
Co-operative Banks and also in Post Offices and earning the interest income
from such deposits are eligible to avail the deduction under Section 80TTB.

Here, the meaning of senior citizen is an
individual resident in India
who is of the age of 60 Yrs or more at any time during the relevant financial
year.
Firms, an association of persons or a body of
individuals are not allowed to claim the deduction under Section 80TTB.

Also, if a senior citizen claimed the deduction under
Section 80TTA (all individuals can claim up to Rs.10,000 deduction against the
interest income received from a savings account), then they are not allowed to
claim the deduction under Section 80TTB.

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How much
can we claim as the deduction under Section 80TTB?

As I mentioned above, if you are a senior citizen who
is holding the FDs with Banks, Co-operative Banks and also in Post Offices and
earning the interest income then you are eligible to claim up to the maximum of
Rs.50,000 in each financial year.

The maximum deduction allowed under Section 80TTB is
Rs.50,000. Hence, assume that you have Rs.45,000 as an interest income of FDs.
In such situation, you are allowed to claim only the actual interest income
(because the actual interest income is less than the maximum limit available
under Section 80TTB).

Same way, assume that you have Rs.60,000 as an
interest income from all FDs together. In that situation, as I mentioned the
maximum deduction allowable for deduction under Section 80TTB is Rs.50,000, you
can claim Rs.50,000 as the deduction. Rest of the Rs.10,000 will be your taxable
income.

Difference between
Section 80TTA and Section 80TTB

There is a slight difference between Section 80TTA
and Section 80TTB. Hence, many get confused between these two income tax
sections.

Hope above information clears you
about Section 80TTB and also the difference between Section 80TTA and Section
80TTB.

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