Partial Tax Exemption Under Section 80TTB

• Interest income from Senior Citizen Savings Accounts is partially tax-exempt under Section 80TTB of the Income Tax Act.
• Senior citizens can claim deduction up to ₹50,000 per financial year on total interest earned.
• The exemption applies to interest from savings accounts, fixed deposits, and recurring deposits with banks, co-operative banks, and post offices.
• This benefit is exclusive to individuals aged 60 years or above.
• The deduction is allowed on gross interest, not on interest after TDS.

Exemption Limit Applicability

• The ₹50,000 exemption is total across all eligible interest sources.
• If interest earned exceeds ₹50,000, the excess is taxable as per the individual’s slab.
• No separate exemption is available for each account or deposit.
• The exemption is available even if the senior has multiple bank accounts.
• It is advisable to calculate total interest income before filing returns.

TDS and Tax Filing Implications

• Banks deduct TDS if the total interest exceeds ₹50,000 in a financial year.
• Senior citizens can submit Form 15H to avoid TDS if their taxable income is below the exemption limit.
• Interest income, even if exempt, must be disclosed in the ITR.
• Claiming Section 80TTB is done while filing returns under appropriate heads.
• Non-disclosure of interest income may result in notices or penalties.

Exclusions and Clarifications

• Section 80TTB does not apply to interest from corporate bonds or mutual funds.
• This section is not available to non-senior taxpayers, who can claim under 80TTA for savings account interest only (up to ₹10,000).
• The benefit applies to resident senior citizens only, not NRIs.
• The account must be held in a recognized Indian financial institution.
• Interest from joint accounts is proportionally considered based on primary holder’s age and share.

Planning and Advisory

• Seniors should track cumulative interest income across banks to manage tax efficiently.
• Investing smartly within the ₹50,000 exemption limit optimizes returns.
• Consider separating savings and FDs to simplify computation.
• Consult a tax advisor for structuring joint accounts or large deposits.
• Timely declaration and submission of Form 15H can prevent unnecessary TDS deductions.