Explained: tax exemption rules for postal savings accounts
Small savings plans, apart from term deposits, are the safest option among risk-free instruments for investing. Small savings plans, like post office savings accounts, have their interest rates updated quarterly. The government left the interest rate on small savings plans stable for the July-September quarter. Just like an interest-bearing account with a bank, one can also open a savings account with a post office to meet urgent or immediate financial needs. But do you know the tax exemption rules for postal savings accounts and how much tax you can save? Let’s discuss briefly.
Tax exemption rules for postal savings accounts
Although it is well known that a person can tax deduct up to Rs 10,000 from his interest income received from a postal savings account under section 80TTA. While seeking the tax benefit under Section 80TTA, a depositor can also claim interest from a Postal Savings Account as non-taxable income. Therefore, Section 10 (15) (i) of the Income Tax Act allows you to claim interest on a Postal Savings Account as tax-free income.
According to a government announcement dated June 3, 2011, interest on postal savings accounts up to Rs 3,500 for single accounts and Rs 7,000 for joint accounts is tax exempt. “To the extent of the interest of Rs. 3,500 in the case of an individual account and Rs. 7,000 in the case of a joint account,” the notification reads. Individuals can claim interest income on savings accounts held with a post office up to Rs 10,000 under Section 80TTA of the Income Tax Act, or up to to Rs 50,000 under Section 80 TTB if they are senior citizens.
In addition, he can claim the benefit of the deduction under Article 10 (15) (i) on interest income from a savings account with a post office up to Rs 3 500 for an individual account and Rs 7,000 for a joint account. As a result, a non-elderly person can declare Rs 7,000 as non-taxable interest on a co-owned post savings account, as well as a tax benefit on interest income of up to Rs 10,000 on a joint-ownership account. Savings post in a surplus of Rs 7,000, respectively.
Remember that you must declare such an exemption on your income tax return (ITR) under the heading âExempt incomeâ if you have declared an exemption on the interest you earned on your savings account. at any post office.
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