Senior Citizens: According to the Income Tax Act, some exemption has been made for senior citizens on their income. Under Section 80TTB of the Income Tax Department, there is a provision for tax exemption on interest up to Rs 50 thousand received by senior citizens on deposits in banks, post offices or co-operative banks. According to this provision, banks, cooperative banks or post offices cannot deduct TDS on this income from deposits. The Central Government had introduced this provision during the Budget 2018 to give the benefit of tax exemption up to a certain limit to senior citizens who are 60 years of age and above. Many schemes have been implemented by banks and post offices for senior citizens. They also get more interest on deposits as compared to other individuals.
Key points of the provision:
- According to these provisions, banks, post offices and co-operative banks will not deduct TDS on income up to Rs 50,000 from interest earned on deposits by senior citizens.
- This provision of tax exemption for senior citizens was introduced under Section 194A of the Income Tax Act.
- The interest of Rs 50,000 for a financial year is calculated separately for each bank.
- As per the provision, interest income above Rs 50,000 will attract income tax as per the tax slab of the taxpayer.
- Senior citizens will not get exemption under section 80TTB of Income Tax from interest earned on Company Fixed Deposit Bonds NCDs.
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