Senior Citizens get income tax benefits on interest earned from Savings Accounts, Fixed Deposits, Recurring Deposits, and other accounts in banks under Section 80TTB with a maximum limit of Rs. 50,000 in a financial year. It helps them have a financial cushion and not to pay tax on interest earned to some extent from these deposits that might be their only source of income.
Section 80TTB of the Income Tax Act was introduced to provide tax benefits for senior citizens on interest income from Savings Accounts, Fixed Deposits, and Recurring Deposits. If they are 60 years or older at any time during the financial year, they can claim a maximum of Rs. 50,000 through this deduction.
Section 80TTA
Section 80TTA of the Indian Income Tax Act states that those under 60 can claim the Savings Account interest amount. The limit for them is Rs. 10,000, which can be considered an exemption. However, this benefit only applies if the account holder opts for the Old Tax Regime.
Section 80TTB
If you are above 60, you are eligible to claim a maximum of Rs. 50,000 under Section 80TTB. Below are the steps to calculate and claim a tax deduction:
- Calculate the interest amount earned from your Savings Accounts from banks.
- Add the interest amount earned from FD and RD rates throughout the financial year.
- Add the numbers. You can claim Rs. 50,000 or the total amount, whichever is lower while filing Income Tax Returns or ITR for the respective financial year.
While filing the returns, the total interest income amount must be included in the Income from Other Sources section. Rs. 50,000, or the total amount, whichever is lower, can be claimed under Section 80TTB. You need not pay income tax on the interest earned for the present financial year.
Income tax savings by senior citizens
Suppose the interest amounts earned by you in a financial year for Savings, FD and RDs are Rs. 5,000, Rs. 70,000, and Rs. 9,000, respectively. The total interest earned is Rs. 84,000, of which you can only claim Rs. 50,000 under Section 80TTB for senior citizens. You can file your ITR and claim them under Section 80TTB. Additionally, you can fill out Form 15H in the bank where you hold the Recurring Deposit Account to avoid tax deductions at source.
Points to note
Remember, you cannot claim tax deductions under both sections simultaneously. Section 80TTA is for people who are below 60 years old, and Section 80TTB is for people who are 60 years old and above. You can claim only one deduction option here.
Conclusion
You are not required to submit specific documents to the bank to claim returns under Section 80TTB. Instead, you can do it while filing an ITR. Before proceeding, ensure that your PAN Card and registered mobile number are linked to all your Bank Accounts and Term Deposits for seamless tax redemptions.
