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Section 80TTB: Tax Deduction for Senior Citizens on Interest Income

Updated on: 23 May, 2025 03:38 PM

Section 80TTB is a provision under the Indian Income Tax Act that offers tax benefits to senior citizens on their interest income. Introduced in the Union Budget of 2018, this section aims to provide relief to senior citizens who depend on interest earned from their savings. Old age often comes with physical and mental health concerns that affect the individual’s finances. Section 80TTB deduction of the Income Tax Act simplifies taxes for senior citizens and provides them tax relief on their post-retirement earnings.

As per the Income Tax Act, a “senior citizen” is one who is a resident individual of age 60 years or above at any time in the relevant financial year. Under this section, senior citizens can avail a deduction of upto Rs.1,00,000 from interest income earned on deposits during the relevant financial year. However, there are certain limitations and exceptions to this section. The following article provides detailed information on Section 80TTB deduction and will help you navigate its clauses and conditions.

Latest Update (New Tax Bill 2025):

EXISTING ACT NEW BILL IMPACT
  • 80TTA- general public
  • 80TTB - senior citizens
  • Merged into single section 153
  • Structured provisions
  • Clearly defined subsections
Ease of use particularly for senior citizens.
Scattered Eligibility criteria and deduction limits for different categories of assessees are now explicitly mentioned. Enhances clarity

Also, the threshold for deduction of TDS under section 194A has been increased from Rs. 50,000 to Rs. 1,00,000.


What is Section 80TTB?

Section 80TTB is a section that deals with the interest deduction for senior citizens. Under this section, senior citizens can claim a deduction of upto Rs.1,00,000 interest on income earned from various types of deposits. This section bestows the right to senior citizens to claim a deduction of Rs 1,00,000 on the interest income earned on deposits (saving or fixed). It is designed to help the senior citizens to maintain a decent lifestyle after the retirement phase, many of whom depend on their interest income for these expenses. Section 80TTB has certain limits and eligibility criteria that should be followed in order to gain the benefits from the same. However, there are certain limits and eligibility criteria that need to be followed to avail of section 80TTB deduction.


Deduction Available Through Section 80TTB

The amount deducted should be the amount specified below from the gross total income, and it should be upto Rs. 1,00,000 specified income is any of the following sources of income in aggregate -

  • Interest on bank deposits; either savings, recurring, or fixed deposits.
  • Interest on deposits at the post office.
  • Interest on the deposits held in co-operative society mainly engaged in the business of banking. This may include a co-operative land mortgage bank or a co-operative land development bank.

One must note that the interest earned on savings accounts and fixed or recurring deposits held with the above three entities will be considered for the purpose of deduction. Moreover, there are also other interests earned with other types of offices. These include Senior Citizen Savings Scheme accounts, post office time deposits, five-year recurring deposits, and Post Office Monthly Income Schemes. These will also be eligible for deduction.

The interest incomes are usually added to the gross total income of the individual and taxed at the rates specified for the person.


What is the Eligibility for Section 80TTB Deduction?

The senior citizens, as per the definition prescribed in the Income Tax Act, 1961 are the eligible candidates for the applicability of Section 80TTB. The following are the legitimate eligibility criteria-

  • A resident senior citizen
  • Age should be 60 years or above at any time during the relevant Financial Year (FY)

What are the Exceptions to Section 80TTB?

It should be noted that Section 80TTB is applicable only to senior citizens who are residents of India and not NRIs (Non-resident Indians).

The Exception to section 80TTB include:

  • HUFs and individuals below 60 years of age.
  • Non-resident Indians (NRIs)
  • Entities like associations of persons (AOP), bodies of individuals (BOI), or firms.
  • Senior citizens cannot claim deduction under section 80TTB for the interest earned on investments like fixed deposits with companies, bonds, or NCDs.
  • Section 80TTB deduction is not available to those opting for the new regime.

If the interest income is derived from the deposit held by or on behalf of a firm, then an Association of Persons (AOP) or a Body of Individuals (BOI), Section 80TTB deduction is not available for the partner of any such firm or any member of such an AOP or BOI while computing their total income.


How to Calculate Your Deductions Under Section 80TTB?

To calculate your deductions under Section 80TTB of the Income Tax Act, which pertains to interest income for senior citizens, you can follow these steps:

  • Determine the eligible interest income: Calculate the total interest income earned from specified sources, such as bank deposits, fixed deposits, savings accounts, or post office deposits during the financial year.
  • Identify the maximum deduction limit: Under Section 80TTB, the maximum deduction available for senior citizens is Rs. 1,00,000. However, if your total interest income is less than Rs. 1,00,000, you can claim the actual interest income as a deduction.
  • Compare interest income with the maximum limit: If your interest income is equal to or less than Rs.1,00,000, you can claim the entire interest income as a deduction under Section 80TTB. If your interest income exceeds Rs.1,00,000 you can claim a maximum deduction of Rs.1,00,000.
  • Calculate the deduction amount: If your interest income is higher than the maximum limit of Rs. 1,00,000, the deduction will be capped at Rs. 1,00,000. If your interest income is less than or equal to Rs. 1,00,000, you can claim the actual interest income as a deduction.

For example:

  • If your interest income is Rs. 40,000, you can claim Rs. 40,000 as a deduction under Section 80TTB.
  • If your interest income is Rs. 1,10,000, you can claim a deduction of Rs. 1,00,000 under Section 80TTB.
    Report the deduction in your income tax return: When filing your income tax return, report the eligible deduction under Section 80TTB in the appropriate section. Ensure that you retain the necessary documentation, such as bank statements or interest certificates, to substantiate your claim if required.

Section 80TTB deduction is specifically available to senior citizens, aged 60 years or above. However, you need to file an ITR to claim this exemption. So make sure you file your ITR by the ITR filing deadline.

File ITR

What are the Key Differences Between Section 80TTA vs 80TTB?

While 80TTB is available to senior citizens only, section 80TTA deduction can be availed of by individuals below 60 years of age. Here are the key points of difference between section 80TTA and 80TTB -

Section 80TTA Section 80TTB
Section 80TTA is applicable to individuals and HUFs except for senior citizens. Section 80TTB is exclusive for senior citizens.
The quantum of deduction specified for Section 80TTA is up to INR 10000 In Section 80TTB, the quantum of deduction increases up to INR 1,00,000.
The specified type of income for the eligibility of Section 80TTA is the interest on Savings account. Section 80TTB is more open to counting the interest income on all kinds of deposits.

Documents Required for Claiming Deductions under Section 80TTB

Senior citizens are not required to furnish any special documents for claiming a deduction under section 80TTB. They can claim their section 80TTB deduction by furnishing their PAN number, interest certificate, and bank statement.

  • Bank Statements: You may need to provide bank statements or passbook entries that show the interest income earned from specified sources like bank deposits, fixed deposits, savings accounts, or post office deposits. These statements should clearly indicate the interest earned during the financial year.
  • Interest Certificates: Some financial institutions or banks provide interest certificates specifically for tax purposes. These certificates outline the interest earned on your deposits and can be used as supporting documentation for claiming the deduction under Section 80TTB.
  • Fixed Deposit Receipts: If you have invested in fixed deposits, you might need to provide the fixed deposit receipts or certificates as evidence of the interest earned.
  • Savings Account Statements: If you have earned interest on savings account balances, you may be required to provide statements from your bank that clearly show the interest income credited to your savings account.
  • Post Office Deposit Documents: If you have investments in post office deposits, you may need to provide relevant documents such as deposit certificates or statements that indicate the interest income earned.
  • Any other Supporting Documents: Depending on the tax authority's requirements, you may need to provide additional supporting documents that validate your interest income and claim under Section 80TTB. This could include documents related to other interest-earning instruments like recurring deposits or bonds.

How to Claim Deductions Under Section 80TTB?

Here are the steps that you need to follow to claim deductions under section 80TTB -

  • Calculate Total Interest Income: Include interest accrued from eligible sources like savings accounts, fixed deposits, and post office deposits during the financial year.
  • Check Deduction Limit: Ensure that the total interest is not more than ₹1,00,000. If it is more, you can claim up to ₹1,00,000 only.
  • Report While Filing ITR: Report the interest income in "Income from Other Sources" and deduct the same under Section 80TTB in your return.
  • Keep Supporting Documents: Keep bank statements, passbooks, and interest certificates as documentation in the event of an inquiry.

If you are a senior citizen, make sure to file your ITR by 31st July and claim the deductions you are eligible for. And if you find ITR filing complicated, don’t worry! You can simply connect with our tax experts who can not only help you with tax filing but also help you maximize your tax savings and provide post-filing notice assistance. Book an eCA Now!


FAQs on Section 80TTB

Q- How can one understand the tax savings for senior citizens through Section 80TTB?

Tax savings for the senior citizens has come off as being much simpler than before since the introduction of Section 80TTB. In fact, compared to the normal taxpayer, the senior citizen is able to have a greater saving through their interest incomes on various fixed and savings deposits.

Income Normal Citizen Senior Citizen 1. Savings interest Rs.20000 Rs.20000 2. Interest on FD Rs. 100000 Rs. 100000 3. Additional Rs. 250000 Rs. 250000 Gross Incomes Rs. 370000 Rs. 370000 Deduction Rs. 10000 under 80TTA Rs. 50000 under 80TTB Taxable Total Income Rs. 360000 Rs. 320000

Therefore, the total income of senior citizen is less than normal citizen by Rs.40000/- with the introduction of 80TTB if he/she opts for old tax regime.

The tax computation above is a dynamic one based on the financial year and other rebates and cess rates. Nonetheless, it becomes very noticeable on how Section 80TTB does benefit the senior citizens by a significant margin.


Q- How can senior citizens save more through Section 80TTB?

The tax break is advised to be used for the maximum benefit. The senior citizen must use the tax break to invest in such deposits with entities specified such that the total interest income on deposits comes to Rs 1,00,000 per financial year. It becomes a great saving strategy through investments since the interest income becomes tax-free for senior citizens upto Rs 1,00,000. This is because the interest becomes deductible from their income before taxes are levied.


Q- What is the amount of deduction under section 80TTB for the FY 2024-25?

The deduction is up to Rs.1,00,000 in view of the interest from the deposits held by senior citizens. Senior Citizens holding the FDs, savings account at Banks, Co-operative Banks, and Post Offices, earning interest from such deposits, are eligible to have the deduction under section 80TTB.


Q- What are the benefits of Section 80TTB of Income Tax Act?

It provides extra benefit to senior citizens in the form of deduction of up to Rs. 1,00,000 on interest on FD, etc.


Q- Is deduction of interest income from deposit up to Rs.50,000/- under section 80TTB available to senior citizens is over and above deduction up to Rs.1,50,000 available under section 80C?

Yes, it is over and above the limit of Rs 1.5 lakhs u/s 80C. the benefit under section 80TTB will only be available under the old tax regime and taxpayers opting for new tax regime cannot claim this benefit while filing ITR.


Q- How is the interest earned on a senior citizen saving scheme taxable? Is the deduction under Section 80TTB applicable even if he/she comes under the 20% tax bracket?

The interest received under the scheme is taxable in the hands of the depositors, Yes. Interest earned can be claimed as deduction u/s 80TTB.


Kamal Murarka

Kamal Murarka
Director - Tax Research & Operations

Kamal Murarka, a Chartered Accountant, is the Director- Tax Research & Operations at Tax2win. He has been with the company since its inception, contributing his expertise in national and international tax assignments. He is also a recognized speaker on tax-related topics, representing Tax2win at various industry forums. His deep knowledge and strategic insights have been crucial in shaping Tax2win’s approach to tax research, operations, and client solutions, driving the company’s continued success.