Senior citizens rely heavily on interest income for their livelihood. Section 80TTB was introduced to provide much-needed tax relief on this interest income.
Deduction Limit: ₹50,000
A resident senior citizen (aged 60 years or above) can claim a deduction of up to ₹50,000 on interest income earned during the financial year.
Eligible Income
Interest earned from:
- Bank Deposits (Savings or Fixed Deposits).
- Post Office Deposits.
- Co-operative Bank Deposits.
Comparison with 80TTA
Section 80TTA provides deduction only up to ₹10,000 and ONLY on savings account interest. 80TTB replaces 80TTA for senior citizens, offering a higher limit (₹50k) and wider coverage (FDs included).
No TDS on Interest
Consequently, banks are not required to deduct TDS on interest income up to ₹50,000 for senior citizens. You should submit Form 15H to the bank to prevent TDS deduction if your total income is below the taxable limit.
Conclusion
Section 80TTB is a significant benefit for our elders, ensuring that a substantial part of their interest income remains in their hands, tax-free.