Old age is often associated with health concerns, both physical and mental for senior citizens, which in turn takes a heavy toll on their finances. Therefore, it is necessary to provide them with adequate relaxations in the form of tax deductions.
Having this in mind, the government keeps on bringing new rules to simplify lives for senior citizens.
The Finance Budget 2018 has chosen to introduce a good number of benefits for our senior citizens. One such important amendment in Budget 2018 (for senior citizens) is the introduction of a new section – Section 80 TTB.

Recent Updates

Latest Update:
CBDT has issued a circular on 9th Sep 21 extending the timelines for certain direct tax compliances for AY 2021-22.
1. ITR Filing due to date extension:
i) ITR filing by taxpayers not covered under audit is extended from 30th Sep 21 to 31st Dec 21
ii)  ITR filing for Tax audit cases is extended to 15th Feb 22 
iii) ITR filing for transfer Pricing is extended to 28th Feb 22
iv) ITR filing of Belated or Revised Return for FY 20-21 is extended from 31st Dec 21 to 31st March 22

2. Furnishing Audit Report:
i) Due date to furnish the audit report is extended to 15th Jan 22
ii) Due date to furnish the audit report for transfer pricing cases is extended to 31st Jan 22

Applicability of Section 80TTB

Section 80TTB is a provision whereby a taxpayer who is a resident senior citizen, aged 60 years and above at any time during a Financial Year (FY), can claim a specified amount as a deduction from his gross total income for that FY. This section is applicable w.e.f 1 April 2018.

Amount of deductions available under 80TTB

A deduction of lower than Rs 50,000 or an amount from a specified income is allowed from the gross total income. Specified income is any of the following income in aggregate:

• Interest on bank deposits (savings or fixed);
• Interest on deposits held in a co-operative society engaged in the business of banking, including a co-operative land mortgage bank or a co-operative land development bank; or
• Interest on post office deposits

Exceptions to Section 80TTB

If the specified deposits are held by or on behalf of a partnership firm, an association of persons (AOP), or a body of individuals (BOI), Section 80TTB deduction is not available for the partner of such a firm or for any member of such an AOP or BOI, while computing their total income.

Section 80TTA vs 80TTB

Section 80TTA provides deductions similar to Section 80TTB. However, it provides deductions of interest only on a savings account held in a bank, co-operative bank, or a post office, from the gross total income of the individual taxpayer or a Hindu undivided family up to Rs 10,000.

With the introduction of Section 80TTB exclusively for senior citizens, deductions under Section 80TTA is not available to senior citizens.

Difference between Section 80TTA and Section 80TTB

Illustration on tax savings by senior citizens

Senior citizens already enjoy a higher basic exemption limit compared to normal taxpayers. The introduction of Section 80TTB further aids tax savings for senior citizens. Let us see how with the following example. Let us consider the following incomes for a taxpayer:

• Savings interest of Rs 5,000
• Interest on fixed deposits of Rs 200,000
• Other income of Rs 150,000

Now, the following table will help you understand how a senior citizen stands to benefit (as against a normal taxpayer) with the provisions of Section 80TTB Tax computation(Amount in Rs)

NOTE: For the AY 2020-21, the rebate under section 87A is available up to Rs 12,500 (for a total income up to Rs. 5,00,000). Hence, the above tax computation would change accordingly. In the above example, the senior citizen ends up paying no taxes in comparison to an ordinary taxpayer, below 60 years of age, who pays Rs 2,600. Read about 80TTA here