Income Tax Deduction: For people above 60, there are various sections available in the Income Tax Act, 1961 to help then save money.
Income Tax Deduction: Tax planning is a key aspect of financial goals. Bet it a young salaried person or a retired, tax planning is something that ensures your capital is parked in such an investment tool that it continues to grow and not eaten away by taxes. For retired employees, effective tax planning becomes crucial because they face challenge of managing health-related expenses in old age. For such people, there are various sections available in the Income Tax Act, 1961 to help then save money. One such section is 80TTB. Let’s take a quick look at the Section 80TTB of Income Tax Act.
What is Section 80TTB?
The government in 2018 introduced Section 80TTB. It bestows the right to senior citizens to claim deduction. An Indian citizen who has attained the age of 60 years and above can claim a deduction of up to Rs 50,000 under Section 80TTB by way of interest on deposits with
A banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898)
Section 80TTB: Calculation
To put things into perspective, let us consider the following income for a taxpayer:
-Savings interest of Rs 10,000
-Interest on fixed deposits of Rs 1,00,000
-Other income of Rs 50,000
Read More: Know The Cash Transactions Via FD & Credit Card That May Bring You I-T Dept Notice
| Particular | Senior Citizen (Rs) |
| Savings interest | 10,000 |
| FD interest | 1,00,000 |
| Other income | 50,000 |
| Gross total income | 1,60,000 |
| Less: Deduction under Section 80TTB | 50,000 |
| Taxable income | 1,10,000 |
How to avail deductions under Section 80TTB in ITR
Senior citizens can claim deductions under Section 80TTB of Income Tax Act, 1961 by simply filing their income tax returns. They need to mention the interest income generated from different deposit accounts into their aggregate income in a fiscal year.
The person should disclose his/her interest earnings under the “Income from Other Sources” header while filing ITR online. Subsequently, they can proceed to claim the applicable deductions under Section 80TTB of the Income Tax Act.
