Earn Tax-Free Income Of Up To Rs 7,000 From A Post Office Savings Account

Most of the popular deductions under the new regime do not apply under the new tax regime, but interestingly, there is one exemption that applies. Interestingly, while many banks offer savings bank interest between 2.75 to three per cent, post offices provide four per cent on a savings bank account.

Interest on a post office savings account is exempt under Section 10(15)(i) of the Income Tax Act. This relief is available under the old and new tax regimes. That being said, the deduction we know of interest income is allowed only in the earlier tax regime.



In section 80TTA/80TTB, deduction (of savings account interest only is allowed under the old regime, not the new one) is allowed. You need to declare your exempt interest income in LINE Schedule EI (Exempt Income) when filing the ITR. You can exclude this exempt income from your gross taxable income.

How To Claim While no special declaration is required, you should keep supporting documents such as bank/post office statements or Form 16A for your records," says Abhishek Kumar, a Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA), and founder and chief investment advisor of SahajMoney, a financial planning firm. The upper limit of exemption is Rs 3,500 in the case of a single Post Office Savings account and Rs 7,000 in the case of a joint account. The interest above these limits is taxable as "Income from Other Sources.

" This concession is available in respect of Post Office Savings Bank accounts and not for any other post office deposit scheme. Select the appropriate ITR form from the Income Tax Department website. "Mention the exempt interest amount (up to Rs 3,500 for single and Rs 7,000 for joint accounts) in Schedule EI (Exempt Income).

Ensure you have documentation of the interest earned from your Post Office Savings Account," says Kumar. In fact, post office savings also offer ATM cards, though there are limits to daily withdrawals and transactions from other banks. E-banking and mobile banking services are also available.

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