The deposits can be with any bank or post office or cooperative bank.
Section 80TTB of Income Tax Act explains the tax benefits available to senior citizens on account of interest income from deposits. The deposits can be with any bank or post office or cooperative bank. According to Section 80TTB of the Income Tax Act, senior citizens can avail a tax deduction of maximum upto ₹50,000 on interest income earned from deposits with a bank, a post office or a cooperative bank in a financial year.
Interest earned on saving deposits and fixed deposits are also eligible for deduction under this provision. Section 80TTB was launched in the Budget 2018.
Here are the five key points:
- Senior citizen means an individual resident who is of the age 60 years or more.
- Banks cannot deduct any tax at source or TDS from the payment of interest on deposits of upto ₹50,000 to the senior citizens. This provision is covered under Section 194A of the Income Tax Act.
- The limit of ₹50,000 is computed for every bank individually for a financial year.
- The amount of interest earned over ₹50,000 would attract the tax as per the applicable slab rate of senior citizens.
- Interest income from company fixed deposits or bonds/NCDs will not qualify for relief under Section 80TTB.