Section 80TTA of the Income Tax Act, 1961 states:
Deduction of interest on deposits and savings accounts.
(a) As per the Banking RegulationAct, 1949 (10 of 1949) a banking company covered by the Banking Regulation Act, (including any bank or banking organization referred to in section 51 of that Act);
(b) A cooperative society engaged in banking (including a cooperative land mortgage bank or cooperative land development bank); either
(c) A post office as defined in clause (k) of section 2 of the Indian Postal Act, 1898 (6 of 1898),
The deduction shall be allowed, in accordance with and in accordance with the provisions of this section, upon the computation of the total income of the assessee as set forth below, viz.
(i) If the amount of such expenditure does not exceed ten thousand rupees in the aggregate, the whole amount; and
(ii) Rs.10, 000/- in any other case.
(2) Where an income referred to in this section arises from a deposit in a savings account held by or on behalf of a company, association, or group of persons, no deduction is allowed under this section for such income when computing the total income of a corporate partner or member of an association or person of a body.
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Description. For purposes of this section, “long-term deposits” means deposits due at the expiration of specified periods.
It is now proposed to add a new section 80TTB to the Income Tax Act 1961 which will fix the age deduction for interest up to Rs. 50,000/- in cash.
The proposed 80TTB section reads as follows:
80TTB, (1) Where is the collector’s total income? Being old includes any income you earn in the form of interest on deposits with:
(a) As per the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act);
(b) A cooperative society carrying on the business of banking (including a cooperative land mortgage bank or cooperative land development bank); either
(c) A post office as defined in clause (k) of section 2 of the Indian Postal Act, 1898,
Shall, in accordance with and in accordance with the provisions of this section. It is permissible, in computing the total income of the assessee, to deduct—
(i) If the amount is not excessive. The total sum of fifty thousand rupees, the whole of such amount; and
(ii) In any other case, Rs.50,000/-.
(2) Where the income referred to in subsection (1) comes from income held by or on behalf of a company, association, or private association, no deduction shall be allowed under this Article in respect of the income when calculating the total income of a business partner or an association member or a person of a body.
Description. For the purposes of this section, “older person” means a person resident in India who has attained the age of sixty years or more at any time during the relevant previous year.
The question arises whether Rs, 50,000/- deduction. It is even an interest allowance in FDR Bank which was not available under Section 80TTA. Another question arises whether senior citizens can claim deductions under Section 80TTA and 80TTB.
Let’s try to understand.
Section 80TTA provides for the deduction of interest excluding interest on term deposits. FDR is a term deposit. This means that there is no deduction of 80TTA in the bank’s FDR interest.
However, there is no restriction in u/s 80TTB. That is, Rs. 50,000/- for a senior citizen deduction is also available on the Bank’s FDR interest.
Also, Finance Bill 2018 does not propose repealing 80TTA. It is available for senior citizens from F.Y 2018-19 as a deduction is suggested under section 80TTB. Seniors can claim an 80TTB deduction. Only when other persons / HUF taxpayers would be eligible for deduction u/s 80TTA.
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