Section 80TTB of ITA, 1961 : Section 80Ttb: Deduction In Respect Of Interest On Deposits In Case Of Senior Citizens

Explanation using Example

Imagine Mr. Sharma, a 65-year-old retired school principal, who has deposited his savings in a fixed deposit with a recognized bank. Over the financial year, he earns an interest of ₹45,000 from this deposit. According to Section 80TTB of the Income-tax Act, 1961, Mr. Sharma, being a senior citizen, is eligible for a deduction of the entire interest income of ₹45,000 from his gross total income when calculating his taxable income, as it does not exceed the threshold of ₹50,000.

Now, if Mr. Sharma had earned ₹60,000 as interest income instead, he would still be entitled to claim a deduction, but this time it would be limited to the threshold amount of ₹50,000, as per the provisions of the law.

However, if Mr. Sharma were a partner in a firm and the interest income was earned by the firm on its deposits, then he would not be able to claim a deduction under Section 80TTB on his share of the interest income when calculating his personal taxable income.