Allowability of deduction u/s 80TTB for SB interest to senior citizens not have fixed deposit interest income
The ITR utilities provided by the income tax efiling website have been programmed to disallow the deduction u/s 80TTA to senior citizens (base on the input of date of birth) by disabling the relevant box in the ITR.
In the Budget 2018 2019 Speech, the Finance Minister announced incentives for senior citizens with the objective of providing them a dignified life. One of the relief was exemption of interest income on fixed deposits with banks and post offices which was increased from Rs. 10,000/- to Rs. 50,000/- and TDS liability was also abolished on such income, under section 194A.
The Memorandum explaining the provisions of the Finance Bill, 2018 stated as under:
“At present, a deduction upto Rs 10,000/- is allowed under section 80TTA to an assessee in respect of interest income from savings account. It is proposed to insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases.”
The text of the sub-section 80TTA was also modified as under:
“Where the gross total income of an assessee (other than the assessee referred to in section 80TTB), being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) in a savings account with…”
Further, sub-section (1) if section 80TTA refers the eligible assessee as being a senior citizen having gross total income including any income by way of interest on deposits.
Thus mere a cursory reading of the section 80TTA read with sub section (1) of section 80TTB suggest that the deduction for savings bank interest shall not be available to senior citizens whose gross total income includes any income by way of interest on deposits with banks/post offices
If there could be any interpretation other than the above, it would make a senior citizen not having any fixed deposits but interest income on his/her savings bank account, suffer which could not be the intention of the legislation that talks of providing them a dignified life.
This could be illustrated as under:
Example-1 Senior Citizen with interest on deposits
| Interest on deposits | 50000 |
| Pension | 600000 |
| SB Interest | 2000 |
| Gross total Income | 652000 |
| Deduction u/s 80TTB | 50000 |
| Total Income | 602000 |
| Income Tax |
30400 |
Example-2 Senior Citizen with savings bank interest only
| Pension | 600000 |
| SB Interest | 12000 |
| Gross total Income | 612000 |
| Deduction u/s 80TTA | Nil |
| Total Income | 612000 |
| Income Tax |
32400 |
Thus, it could be seen if deduction for interest on savings bank is completely disallowed to a Senior Citizen not having any Fixed Deposits he/she put to disadvantage in contrast to Senior Citizen with Fixed deposits. This could not have any justification.
What is to be noted that the language used in section 80TTB is “deposits” not “time deposits”, this is also clear as the section 80TTA specifically excludes “time deposits” from the “deposits”.
Therefore, the threshold of Rs. 50000/- for deduction u/s 80TTB shall include both interest on savings bank account and time deposits.
