There are so many instances that we just get confused, don’t we? One of them is the Section on Income Tax. Well, though these acts and sections are quite a twist on it, the finances would be much before you think of it. Here, we can talk about the difference between Section 80TTA and Section 80TTB of the Income Tax Act.
What is Section 80TTA?
You are able to deduct savings account deposits deposited at a post office, bank, or cooperative organization under Section 80TTA of the Income Tax Act. The requested exemption must be for less than Rs. 10,000.
Have you ever considered the tax implications of the interest you earn on your savings account? However, there are tax advantages on the fundamental savings account as well since the government always tries to encourage its residents to make tiny deposits. Let’s examine in depth the provisions of the Income Tax Act that permit you to request a tax exemption on the interest that is earned on savings accounts.
Under 80TTA Deduction, only interest accrued on a savings account qualifies for a tax credit.
Only the following entities’ saving accounts are eligible for the benefit under 80TTA.
- Post Offices
- A cooperative society that does banking activity (including a cooperative land mortgage bank or a cooperative land development bank)
Who is This Section For?
- HUFs (Hindu Undivided Families) and individuals are both eligible.
- Also eligible for benefits under Section 80TTA are NRIs. They are eligible to receive interest from NRE and NRO savings accounts.
You cannot benefit from Section 80TTA if you are qualified for a tax break under Section 80TTB. Later be discussed.
What is Section 80TTB?
The taxpayer who is a resident senior citizen and is equal to or above the age of 60 during a Financial Year (FY) may deduct a certain amount from his total gross income for that FY under Section 80TTB. This Section will take effect on April 1st, 2018.
From the total gross income, a deduction of Rs. 50,000 is permitted, or a certain amount of income, whichever is lower. Specified income is any combination of the following incomes:
- On bank deposits, interest (savings or fixed)
- Deposit interest earned at cooperative societies that are in the banking sector, such as cooperative land mortgage banks or cooperative land development banks
- On post office deposits, interest
Let’s say a partnership business holds the stated deposits in its name or on its behalf. In that situation, the partner of such a firm or any member of such an Association of Persons (AOP) or Body of Individuals (BOI) is not eligible for a Section 80TTB deduction when determining their total income.
Who is This Section For?
- Only local older citizens qualify.
- No non-residents are permitted. Taxpayers who are younger than 60 are ineligible.
How are the Two Sections Different from Eachother?
When comparing Section 80TTB’s relief with that under Section 80TTA, you can notice
- Savings accounts are the only ones eligible for relief under Section 80TTA, whilst Fixed Deposit Accounts are covered under Section 80TTB.
- Section 80TTA: Rs. 10,000; Section 80TTB: Rs. 50,000
- Relief is available to both individuals and HUF under Section 80TTA. Only people are given relief under Section 80TTB.
- Only local seniors are given relief under Section 80TTB. Under Section 80TTA, there is no such limitation.
Which Section in Particular?
As you can see, residents who are elderly citizens are eligible for a tax credit under Section 80TTB. As a result, they will be unable to benefit from the tax provisions of Section 80TTA of the Income Tax Act.
Only those who qualify for Section 80TTB relief may also qualify for Section 80TTA relief.
Seniors shouldn’t have anything to complain about because Section 80TTB offers significantly higher and more comprehensive tax relief.
Additionally, senior citizen NRIs are not eligible to benefit from Section 80TTB because it exclusively offers relief to Indian residents. Since these older persons are no longer eligible for Section 80TTB benefits, they may now seek relief under Section 80TTA. In any case, interest earned on NRE savings accounts or FDs is tax-free. This advantage under 80TTA for interest on NRO savings accounts is available to senior citizen NRIs.
How Much Can You Claim?
For Section 80TTA:
You may deduct up to 15% of the asset’s cost under this clause. The maximum you may claim, for instance, if you purchase a house worth Rs. 50 lakh is Rs. 7.5 lakh.
The most you can claim for residential properties is 7.5 lakh, while the most you can claim for non-residential properties is 10 lakh.
For Section 80TTB:
You must first submit a declaration form stating that you have invested in immovable property in order to be eligible for this benefit. Within three years of the date that you bought the asset, you must file this form. You must submit a return detailing the purchase of the asset after submitting the declaration. Within a year after the fiscal year’s conclusion, the return must be filed.
You cannot collect the benefits under either of these sections if you don’t meet any of these requirements.
Aiming at those who invest in immovable property, Section 80TTA. They are eligible to offset the cost of the purchase from their taxable income. However, Section 80TTB is intended for people who invest in transportable property. They are eligible to deduct the full amount of capital gains.
Individuals may deduct the same amount under both programs. They have different eligibility requirements, though.