Introduction
Auto Fill IncomeTax Revised Form 16 for the F.Y.2020-21 U/s 115 BAC with interest income for senior citizens
Interest income is the amount paid to an entity to pay its loan or to another entity to use its funds. On a larger scale, interest income is the amount of money an investor earns in an investment or project.
Such income is
generally taxable, but the Income Tax Act provides for some exemptions on such
income. Individuals and senior citizens are given such exemptions separately.
Why have senior
citizens in
Most of the
elderly people in
Their savings,
if any, are not enough to cover their daily expenses, especially medical
expenses. Valuable older people are looking for a good short-term financial
plan to earn a good income from their money. Income tax laws provide variously
benefits to senior citizens in
Citizens, The
limit of financial tax exemption for ordinary citizens below the age of 60 years
is Rs. 2.5 lakhs in a financial year. However, in the case of senior citizens,
the discount limit is three lakh rupees and in the case of super senior
citizens, the limit is five lakh rupees.
Thus, the annual
income is up to Rs 3 lakh and no senior citizen has to file any tax or ITR
without deducting any TDS in the financial year. Similarly, a super senior
citizen is exempted from paying tax and filing ITR if his annual income is up
to Rs, 5 lakh and no TDS is deducted.
Considered a senior citizen in
By law, a senior
citizen is an individual resident between the ages of 60 and 80 as the last day
of the previous financial year.
Who is Super
Senior Citizen in
A senior citizen
called who's Age above 80 Years of age
Is interest
income taxable?
Interest income
from fixed deposits is taxable. This is covered in your income tax return under
the heading 'Income from other sources.
Senior citizens
earning interest income from FDs, savings accounts and recurring deposits can
get income tax exemption up to Rs 50,000 per annum under section 80TTB. This is
through the amendment of the Finance Act 2018.
What is Section
80TTB?
Section 80TTB
which was applicable w.e.f. 1 April 2018 is a provision under which a taxpayer,
a resident senior citizen, at any time during any financial year, aged 60 years
and above, can deduct a sum of money from a certain income from his total
income from that total income for that financial year.
Specific income
is any one of the following:
Interest on bank
deposits (savings or fixed);
Interest on
deposits in cooperative societies engaged in banking business including
cooperative land mortgage bank or a cooperative land development bank; Or
Interest on post
office deposits
Senior citizens
cannot claim a waiver under Section 80TTA
Section 80 TTA
gives a rebate of Rs 10,000 on interest income. This discount is available to
any individual and HUF.
This deduction on interest earned is allowed –
From a savings account with a bank
From a savings
account with a cooperative society taken into the banking business
From a savings
account with a post office
Previously, this the deduction was available to everyone regardless of their age, i.e. for persons
under 60 years of age, senior citizens and super senior citizens.
However, senior
citizens will not be able to claim an exemption under this section from the financial year 2011. After Budget 2018, 80 TTA of the department has been
amended which prohibits senior citizens from claiming any rebate on interest
earned on savings accounts with banks or post offices under this particular
department. However, they have to claim a rebate of up to Rs 50,000 for the interest
received from the savings account and have fixed deposits in banks and post
offices under the newly inserted department, i.e., Section 80TTB.
To know which
interest income is taxable and what are the exemptions, see the following
summary: -
Interest income
on a savings account - Rs. 10,000 (Rs. 50,000 for senior citizens) Interest
income on a savings account is exempt. However, any interest income on a
savings account above Rs 10,000 is taxable as per the applicable slab rate. To
calculate the exemption limit, interest income is added from all accounts,
including bank savings accounts, post office savings accounts and cooperative
bank savings accounts.
Interest income on recurring deposits - Savings of interest earned on recurring deposits are fully taxable without any discount against any savings account. In addition, under Section 1944, banks deduct TDS at the rate of 10% on interest on recurring deposits.
