Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Whether interest earned from deposits in nhai/rec capital gains bonds be exempted under sec. 80ttb?

Satish (Work) (111 Points)

02 February 2019

Whether interest earned up to Rs. 50,000/- from deposits held by a Senior Citizen in NHAI/REC Capital Gains Bonds be exempted u/s 80TTB for AY 2019-2020?

Reply
Follow
Share

7 Replies

Satish (Work) (111 Points)
Replied 02 February 2019

I guess not! Conditions 80TTB(1) (a) or, (b) or, (c) are not satisfied.

Deduction in respect of interest on deposits in case of senior citizens.

80TTB. (1) Where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with—

(a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);

(b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or

there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction—

(i) in a case where the amount of such income does not exceed in the aggregate fifty thousand rupees, the whole of such amount; and

(ii) in any other case, fifty thousand rupees.

(2) Where the income referred to in sub-section (1) is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

Explanation.—For the purposes of this section, "senior citizen" means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 02 February 2019

no it's not deductible. fully taxable

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 02 February 2019

in my opinion, it can be claimed as deduction under section 80ttb. correct me if I'm wrong

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 02 February 2019

deduction is available on on deposit with banks post office savings and savings account with bank. no other deduction allowed.
chk section for more details

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 02 February 2019

80TTA. [1] Where the gross total income of an assessee 17[[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— Under section 80tta only interest earned on deposits (excluding time deposits) are eligible for deduction but under section 80ttb, interest earned on all kinds of deposits including savings deposit time deposits etc are eligible for deduction subject to a maximum of 50000. Correct me if I'm wrong

1 Like

Satish (Work) (111 Points)
Replied 03 February 2019

@ RAMAKRISHNAN R

That's 80TTA. Check 80TTB:

https://www.incometaxindia.gov.in/_layouts/15/dit/Pages/viewer.aspx?grp=Act&cname=CMSID&cval=102120000000071864&searchFilter=[{"CrawledPropertyKey":1,"Value":"Act","SearchOperand":2},{"CrawledPropertyKey":0,"Value":"Income-tax%20Act,%201961","SearchOperand":2},{"CrawledPropertyKey":29,"Value":"2018","SearchOperand":2}]&k=&IsDlg=0

Satish (Work) (111 Points)
Replied 03 February 2019

Came across a nice article on 80TTB:

https://economictimes.indiatimes.com/wealth/tax/how-senior-citizens-can-avail-tax-break-on-interest-income-under-sec-80ttb/articleshow/66915038.cms

Not all interest income can be claimed as a deduction

Under section 80TTB, only interest received from deposits held with a bank, a co-operative society engaged in banking or with a post office can be claimed as deduction.

This would mean that interest earned on savings accounts and deposits (such as fixed deposits or recurring deposits) held with any of these three entities will be eligible for deduction under this section. Further, interest earned on other types of deposits with post offices such as Senior Citizen Savings Scheme accounts, post office time deposits, 5-year recurring deposits and Post Office Monthly Income Schemes will also be eligible for deduction.

Practising Chartered Accountant, Sachin Vasudeva says, "Section 80TTB specifically mentions the sources of interest income on which deduction can be claimed. Interest received from banks (from savings accounts, fixed deposits, and recurring deposits), co-operative banks and post office (savings accounts and other post office savings schemes such as NSC, Senior Citizen Savings Scheme, PO Monthly Income Scheme etc.) will be eligible for deduction. Therefore, interest received from any other sources such as interest from company FD will not be eligible for deduction."

This also implies that interest earned on bonds and debentures would not qualify for deduction under this section.

These interest incomes are normally added to the gross total income and taxed at the rates applicable to the individual.

Interest from NSCs can be claimed as deduction. Nice!