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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Caselet: Mrs. Kavita Rao, aged 66, is a resident senior citizen with no income except interest. Her total bank fixed deposit interest in the year is Rs 56,000 from one bank. Which statement is correct regarding deduction available to her on this interest income?

A resident senior citizen can claim a deduction of up to Rs 50,000 on interest from bank, post office and co-operative deposits. Applying it to Rs 56,000 interest leaves Rs 6,000 taxable. The lower limits apply to non-senior citizens on savings account interest.

  1. AShe can claim a deduction up to Rs 50,000 on interest from deposits, so Rs 6,000 is taxableCorrect
  2. BShe can claim no deduction on deposit interest
  3. CShe can claim Rs 40,000 only, since she is a senior citizen below 80
  4. DShe can claim Rs 1,00,000 on interest from deposits

Explanation

A resident senior citizen (60 years or above) can claim a deduction up to Rs 50,000 on interest from bank, post office and co-operative bank deposits. Rs 56,000 minus Rs 50,000 leaves Rs 6,000 taxable. The Rs 40,000 limit applies to non-senior individuals/HUFs for 80TTA on savings interest only.

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