Whether you are a salaried employee or a retired person, tax planning is an essential component of achieving financial objectives. It ensures that the money is invested in a manner that allows it to grow without being eaten up by taxes.
Because retired workers struggle to pay for medical expenses as they get older, they need to do good tax planning. There are a number of sections in the Income Tax Act of 1961 that can assist senior citizens in saving money.
How does Section 80TTB work?
One such provision for senior citizens is Section 80TTB, which allows individuals over the age of 60 to claim tax deductions up to Rs. 50,000.
Senior citizens can take advantage of the 80TTB deduction to reduce their tax burden and improve their financial security. Senior citizens can deduct a variety of different types of interest income.
- salary paid in interest that is held by a bank.
- Revenue from post office-held deposits in the form of interest.
- A cooperative society engaged in the banking industry pays interest on deposits.
How does Section 80TTA work?
Section 80TTA and Section 80TTB offer deductions that are comparable. However, only savings accounts held in banks, cooperative banks, or post offices are eligible for interest deductions of up to Rs 10,000 from the taxpayer’s gross total income or that of a Hindu Undivided Family (HUF).
Section 80TTB: How to calculate the deductions allowed by this section Consider the following taxpayer’s income:
Saving interest: 5,000
FD interest: 2,00,000
Other income: 1,50,000
Under Section 80TTB, the deduction is now limited to Rs 50,000, making the taxable income Rs. Senior citizens will pay Rs. 3,05,000 in taxes, while non-senior citizens will pay Rs. 3,50,00 since Rs. was taken out of Section 80TTA. Additionally, 5000 will be deducted.
Because Section 80TTB was made just for seniors, they no longer qualify for the deduction under Section 80TTA.