Deduction under section 80TTB for interest on deposits of senior citizens (as set, 1961 Act, AY 2019-20)

Section 80TTB was inserted with effect from 1 April 2019, so assessment year 2019-20 is the first year it applies.

Who can claim it

Only a senior citizen: an individual resident in India who is 60 years of age or more at any time during the previous year (Explanation to section 80TTB). A non-resident, a Hindu undivided family or a younger individual cannot claim it.

Interest that qualifies

Interest on deposits, both savings and time deposits, with:

1. a banking company governed by the Banking Regulation Act, 1949, or another bank or banking institution to which that Act applies;
2. a co-operative society that does banking business, a co-operative land mortgage bank or land development bank included; or
3. a Post Office.

The interest must be included in his gross total income. Interest on deposits held by or for a firm, an association of persons or a body of individuals does not qualify in the hands of a partner or member (section 80TTB(2)).

Amount of the deduction

The whole of the interest, up to ₹50,000 in the year (section 80TTB(1)).

Points to note

• No section 80TTA for him: section 80TTA (savings account interest up to ₹10,000) does not apply to an assessee to whom section 80TTB applies (section 80TTA(1), as amended with effect from 1 April 2019).
• Unlike section 80TTA, the deduction covers interest on fixed and recurring deposits too, not only savings accounts.
• Interest on company deposits, debentures or bonds does not qualify.
• Like every Chapter VI-A deduction, it cannot exceed the gross total income (section 80A(2)).

Example (our own figures)

Mrs. Saroj, resident, turns 60 in January 2019. In 2018-19 she earns savings bank interest of ₹8,000, fixed deposit interest of ₹47,000 from a bank and ₹6,000 on company debentures. Interest on bank deposits is ₹55,000; her deduction under section 80TTB is ₹50,000. The debenture interest is fully taxable.