Deduction on Interest (Section 80TTA) & (80TTB Senior Citizens)

Section 80TTA and section 80TTB are the two sections of income tax which bring huge benefits in the form of tax savings.

If you are earning interest income from deposit accounts and have to pay huge taxes then these sections really bring benefits for you and help you save taxes.

These sections of deduction provide the deduction of interest income. Both these sections have their own provisions and conditions. So for taking the benefits of these sections in full, you must know the conditions in the individual sections.

In the following we have explained in detail about the exemption limit and who is eligible for availing deduction under section 80TTA and sectionTTB  of Income Tax Act’ 1961.

 

What is Section 80TTA of Income Tax Act?

Section 80TTA provides the deduction on interest received on deposits in Saving Accounts. If a person deposits its surplus funds in his Saving Accounts and he will receive an interest upon it.

Interest on deposits in a savings account will become your income and Interest will be shown in income from other sources while calculating your total income and tax liability.

Under section 80TTA of Income Tax you can avail deduction for such saving account interest and can save tax. This deduction will be given from gross total income.

 

Who is eligible for availing deduction under Section 80TTA?

Every individual or HUF is eligible for availing deduction under Section 80TTA. This deduction of interest on Saving Account will not be allowed to any firm, company, AOP etc. Only individuals or HUF can avail the benefit of this deduction.

 

What types of deposits are eligible for availing deduction under Section 80TTA?

Deduction under Section 80TTA will be allowed only upon interest on deposits in a Saving Account. If you are receiving interest on fixed deposits, Recurring deposits or other time deposits, these interests are fully taxable, No deduction will be allowed on these interest.

Deduction on interest of fixed deposits, Recurring deposits or time deposits is allowed only to senior citizens under Section 80TTB (which is explained after section 80TTA).

But in Section 80TTA individuals or HUF can take deduction for interest on Saving Accounts. Rest all the interest on other deposits accounts is fully taxable as a part of other sources of income.

Also Read: Section80E – Deduction of Interest Payment on Education Loan

 

What is the amount of deduction under Section 80TTA?

Deduction on interest on Saving Accounts is the amount that is lower of the following two:-

• 100% of saving interest income; or
• Rs. 10,000

Example

If Mr. X receives interest on Saving Account during F.Y 2020-21 is Rs. 50,000 then deduction amount is lower of the following:-

• 100% of saving interest income = Rs. 50,000 or
• Rs. 10,000

So, Lower amount is Rs. 10,000. Deduction under Section 80TTA is allows for Rs. 10,000. In this case Rs. 50,000 becomes your other source income and you can avail deduction only for Rs. 10,000 under Section 80TTA from gross total income.

Maximum deduction you can avail in this section is Rs. 10,000.

 

Whether the deduction amount limit under Section 80TTA is for one bank account or all bank accounts?

Deduction of interest on a savings account allows interest received from all your savings Account, whether the account is in different banks.

While calculating the deduction amount total interest received from all banks being calculated.

It is not like that Rs. 10,000 limit is for each bank, you have to calculate interest of all bank accounts then check if summation is more than Rs. 10000, then deduction allows only Rs. 10,000. If summation is less than Rs. 10,000 then interest earned can avail as deduction.

Also Read: Section 89 (1) & Form 10E for Tax Relief on Arrears of Salary

 

What is Section 80TTB of Income Tax act?

Section 80TTB is a new section that was introduced in the finance budget 2018 which brings the benefits for resident senior citizens aged 60 years and above.

As under section 80TTA individual or HUF can avail deduction of interest on saving Account, similarly deduction of interest also allow under section 80TTB. But the deduction under Section 80TTB can only be available to senior citizens having age of 60 years or more.

Here it is noted that if the senior citizen avails deduction of interest in Section 80TTB then he cannot again allow deduction under Section 80TTA.

So the point is “What is the difference between these two Section 80TTA and 80TTB?”.

For this difference, you also have to understand the provisions under section 80TTB in detail and who can avail benefit under this section.

 

Who is eligible for availing deduction under Section 80TTB?

Only a person who is a resident senior citizen having age 60 years and above can avail deduction under Section 80TTB, No other person will be eligible for this deduction.

This section is only for the benefit of senior citizens. This deduction will be available from your gross total income.

 

What type of interest on deposits senior citizens can avail deduction under Section 80TTB?

Under Section 80TTB, senior citizen can avail deduction of the following type of interest on deposits account:-

• Interest on Bank Deposits (Saving, Fixed Deposits or Recurring Deposits)
• Interest on deposits held in co-operative society which is engaged in the business of banking (including co-operative land mortgage bank or co-operative land development bank)
• Interest on post office deposits

You have to consider the total interest from all banks while calculating the deduction amount.

If deposits are held by or on behalf of Firm, AOP (Association of persons) or BOI (Body of Individuals), then deduction of 80TTB is not available to the partner/member of such Firm, BOI, AOP.

Also Read: Section 80GG: Eligible Deduction for Rent Paid

 

What is the amount of deduction allowed under Section 80TTB for senior citizens?

Section 80TTB provides deduction of interest on all deposits accounts like saving, Fixed Deposit, Recurring deposits, Interest on Post office deposits etc.

Amount of deduction under Section 80TTB shall be lower of the following two:-

• 100% of Interest from deposits accounts; or
• Rs. 50,000

So you have to take the summation of all the interest from different deposits and check if it is more than Rs. 50,000 then maximum deduction can be taken as Rs 50,000.

If it is less than Rs. 50,000 then the whole interest can be taken as deduction.

 

What is the difference between deduction on interest under section 80TTA and section 80TTB?

	Deduction on interest under section 80TTA	Deduction on interest under section 80TTB
Applicability	Individual or HUF	Senior Citizens having age 60 years and above
Deposits covered	Only Saving Account Interest	All types of interest on deposits like. Saving, FD, RD etc.
Maximum Limit	Maximum deduction allow is Rs. 10,000	Maximum deduction allow is Rs. 50,000

Also Read: Section 44AA: Rules & Limit for Maintenance of Books of Accounts

Summary

Deduction under section 80TTA and section 80TTB of Income Tax Act allow the benefits in the form deduction of interest income. By availing deduction under these sections you can save huge tax and also it encourages the habit of savings.