Budget 2018 along with many changes to tax laws also introduced a new Section 80TTB. According to this Senior citizen can claim tax exemption up to Rs 50,000 on interest income from bank/ post office fixed deposit, recurring deposit or savings account.Also, if a senior citizen opts to take advantage of Section 80TTB, he cannot claim further tax benefit u/s 80TTA. Non-senior citizens and HUFs are not eligible for 80TTB exemption. However Non-senior citizens can still continue to avail the tax benefit offered under section 80TTA, where interest income up to Rs 10,000 from savings account is tax exempted.
So, going forward from FY 2018-19 (AY 2019-20) there is NO change for people below age of 60 while for Senior citizens they get additional tax exemption for the interest income. Additionally in case of Senior Citizens the threshold for TDS (Tax Deduction at Source) on interest income has been raised from Rs 10,000 to Rs 50.000 from FY 2018-19. In case your income is less than the income tax threshold you can avoid TDS by filling and submitting Form 15H to relevant banks and financial institutions.
Section 80TTB Vs 80TTA:
As 80TTB is newly introduced section, some people might confuse with 80TTA, hence here is a summary of difference between two sections.
|Section 80TTA||Section 80TTB|
|Eligibility||Available for all tax payers. However, if Senior citizens opt for 80TTB, they cannot take 80TTA advantage||Only Senior Citizens can avail|
|Tax Exemption||Upto Rs 10,000 exemption||Upto Rs 50,000 exemption|
|Eligible Income||Only interest income in savings account is considered (both Post office & bank account are eligible)||Interest income from Fixed Deposit, Recurring Deposit and Savings Account in Banks or Post Office is eligible|
Section 80TTB is good news for senior citizens who mostly are dependent on interest income for their post-retirement expenses. You can also read about some other announcements for Senior Citizens in Budget 2018.