Experts suggest that the government should consider increasing the deduction limit under Section 80TTA (savings account interest) from Rs 10,000 to Rs 20,000. Similarly, they recommend increasing the deduction limit for senior citizens under Section 80TTB, which is currently Rs 50,000.
Union Budget 2025: Finance Minister Nirmala Sitharaman will present the upcoming budget (Union Budget 2025) of Modi’s tenure on February 1, for which taxpayers and common people are eagerly waiting. There is special interest in the Income Tax category, where people want to see if any changes will be announced to reduce the burden on the common man? People have high expectations from the Finance Minister about some things. In such a situation, it is possible that some big announcements can be made in Budget 2025. Let us know what special expectations the common man and taxpayers have from this budget.
Speculation about this year’s budget is focused on possible changes in the tax slab and the introduction of new relief measures. Apart from this, higher deductions are expected to be included in the old tax regime. Experts suggest that the government should consider increasing the limit of deduction under Section 80TTA (savings account interest) from Rs 10,000 to Rs 20,000. Similarly, they recommend increasing the limit of deduction for senior citizens under Section 80TTB, which is currently Rs 50,000 (for fixed deposit interest), to Rs 1 lakh.
Deduction for Savings Interest
Section 80TTA of the Income Tax Act, 1961, provides individuals and Hindu Undivided Families (HUFs) a deduction of up to Rs 10,000 on interest income from savings accounts maintained with banks, co-operative banks or post offices. This deduction is applicable to individuals and HUFs below the age of 60 years. However, it does not apply to interest earned from fixed deposits or recurring deposits (RD).
The deduction limit for interest income on savings bank accounts under Section 80TTA for individuals and HUFs remains at Rs 10,000. This limit has not changed since its introduction in the financial year 2012-13. Therefore, some changes are expected in it.
What can happen for senior citizens?
Unlike Section 80TTA, Section 80TTB is specifically designed for senior citizens and offers a wide range of deductions on several types of interest income. Senior citizens can avail deduction on income from savings, fixed and recurring deposits under Section 80TTB, giving them a tax exemption of up to Rs 50,000.
This deduction applies to interest income from bank deposits, including savings and fixed deposits, as well as post office deposits, providing a financial benefit to senior citizens who rely on safe investments. However, it is important to note that interest earned from bonds and debentures is not eligible for this deduction.
What is the demand being raised regarding the new tax regime?
Keeping in mind the rising healthcare costs in India, the current limit of Rs 50,000 for senior citizens under Section 80TTB should be increased to at least Rs 1 lakh. This amendment in the limit will help balance the potential reduction in interest rates due to the expected repo rate cut by the RBI. To encourage more individuals to transition to the new tax regime, it is recommended that deductions be allowed under Sections 80TTA and 80TTB, as these deductions are currently exclusive to the old tax regime.
