Tax Savings Tips: The process of filing income tax returns for the assessment year 2025-26 is going on. In such a situation, it is very important for senior citizens to know the options to save tax. Section 80TTB, introduced in the budget of the year 2018, was specially made for the elderly. Under this provision, tax exemption of up to Rs 50,000 can be availed on interest received from bank, post office, and co-operative society deposits. This facility is available only in the old tax regime and is not available in the new tax regime 115BAC.
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Who can take advantage of section 80TTB
This exemption is given only to resident Indian senior citizens. That is, people 60 years or above can take advantage of this provision. Its specialty is that this exemption is not limited to savings accounts only, but also applies to interest received from fixed deposits and post office deposits.
Understand the benefits of 80TTB with an example
Suppose a senior citizen earns Rs 8,000 from a savings account, Rs 1,80,000 from an FD, and Rs 3,00,000 from a pension. The total income is Rs 4,88,000. After getting a deduction of Rs 50,000 under section 80TTB, the taxable income will be reduced to Rs 4,38,000. This is a direct tax saving benefit.
Difference between 80TTA and 80TTB
People below 60 years of age and HUF can get a deduction of up to Rs 10,000 only in the interest received on a savings account under section 80TTA. But 80TTB is more beneficial for senior citizens because it includes all deposit schemes, and the limit is also up to Rs 50,000.
Section 194A and TDS relief
TDS deduction on interest income is done under section 194A. Currently, the limit of TDS for senior citizens is Rs 50,000, while for others it is Rs 40,000. Budget 2025 proposes to increase this limit to Rs 1,00,000 and Rs 50,000, respectively, which will provide great relief to the elderly.
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Why is 80TTB special for senior citizens?
A large part of the income of senior citizens is based on interest and a pension. In such a situation, section 80TTB gives them a direct opportunity to save tax. The best thing about this is that no additional documents are required. PAN card, bank statement, and interest certificate are sufficient.