Post Office savings account: There are many benefits of investing in Post Office Savings Account as compared to banks. It has the advantage of getting more interest along with tax exemption.
Most of the people insist on investing in small savings schemes to get good returns with less risk. The biggest feature of these schemes is the government guarantee they get. Apart from this, many other benefits including tax exemption are also available on these schemes. Post Office Savings Account is also one of these schemes. By saving through this account, you can save tax up to Rs 13,500 in a year.
If the post office savings account is held jointly, then your total tax saving limit can reach up to Rs 17,000. According to tax and investment experts, this is an additional tax benefit available to post office savings account holders, which they can claim while filing Income Tax Return (ITR).
Interest rate on Post Office Savings Account
Talking about the interest rate, the post office savings account earns more interest than banks. In this era of low interest rate, interest on savings accounts in banks is getting at the rate of about 3 percent. Whereas, post office savings account is getting interest at the rate of 4 percent. Thus, the post office savings account earns about one third more interest as compared to banks.
Benefit of tax saving with higher interest
In such a situation, investors with low risk are advised to save in post office savings account and avail 33 percent more interest. Also, there is a benefit of 35 percent rebate (Rs 13,500 instead of 10,000) on the income tax front.
Under which rule this benefit is available
Regarding the post savings account, a tax expert says that at present the interest earned on the savings bank account comes under section 10(15)(i) of the Income Tax Act. A notification number GSR 607(E) was issued dated June 09, 1989, according to which the exemption on interest on Post Office Savings Account is as follows – Rs 3,500 on individual account and Rs 7,000 on joint account.
Information about how to give in ITR
This tax exemption of Rs 3,500 on an individual account is in addition to the exemption of Rs 10,000 available under section 80TTA. Thus, such account holders can claim tax of Rs 3,500 or Rs 7,000 while filing their income tax return. They have to declare it as ‘exempt income’ head.
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