Post Office Savings Accounts: If you open a savings account in the post office, you will get double benefit in tax. Apart from this, the interest rate is also better here. Understand by example how it is beneficial for you.
Post Office Savings Accounts: Most people think that the interest income of a savings account is exempted from tax of up to 10 thousand in a financial year, but on investing in post office, get tax exemption on interest income of up to Rs 13500. Can. On the other hand, returns in the post office are also good. Currently, the interest rate on post office savings accounts is 4 percent. At the same time, most commercial banks are offering an interest of less than this (3-3.5%) on savings account. This means, you are getting double benefit by investing in post office.
First of all, know what are the rules for opening a savings account in the post office. According to the information available on India Post’s website, single and two adult joint accounts can be opened. If the child is older than 10 years, he is younger in his name and then savings accounts can be opened in the name of the parent. At least 500 rupees have to be deposited in this account and at least 50 rupees have to be withdrawn. There is no maximum limit. If the balance is not increased from Rs 500 in a financial year, then Rs 100 will be deducted as a maintenance charge. The calculus of interest is between the 10th of every month to the last day of the month. Apart from this, the post office now also provides check books, ATM cards, mobile banking, net banking, Aadhaar seeding, Atal Pension Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana.
Where deduction is approved and where it is not approved
Now talking about taxation, the benefit of deduction is given under the section 80TTA of income tax on the interest income of the savings account. Interest income up to 10 thousand is tax free in a financial year. In this interest income, the interest received through commercial bank saving account, co-operative bank saving account and post office saving account is counted. Interest income on fixed deposits, recurring deposits and other types of time deposits are not covered under this.
Benefit of deduction up to 10 thousand under section 80TTA
Interest income up to 10 thousand is tax free in a financial year. If you have more income than that, then it gets included in your total income, on which you have to pay tax according to the tax slab. If you also have an interest income, then this deduction will have to be claimed while filing income tax return. All the income will have to be added to ‘Income from Other Sources’ during return filing, then deduction has to be made. If you file a return, it is important to mention the income from income from other sources. You must take the benefit of deduction, but the income tax department should be aware of income from other sources.
How to double benefit tax on post office saving account?
In 2011, a gadget notification was released by the central government. According to this notification, the provision of section 10 (15) (i) was included in the Income Tax Act 1961. Through this, the earnings from post office saving accounts were kept in tax exempted category. It is Rs. 3500 for individual and Rs. 7000 in case of joint account. Section 10 (15) (i) is not deduction, but an exception. This reduces your taxable income. With the help of this section, post office savings interest income can be reduced. If you have a joint account, you can get tax relief on interest of 7000 under the examination and 10 thousand under the 80TTA i.e. 17000.
Understand from the example how you will get double benefit
For example, A’s interest income from savings accounts for the financial year 2020-21 is Rs 9500. He has also opened a savings account in the post office, so that his interest income is 4000 rupees. Overall the interest income becomes Rs 13500, but due to 10 (15) (i), he can avail exemption of Rs 3500. In this way, the net interest income (4000-3500 = 500 + 9500 = 10000 rupees) is ten thousand rupees. A can now claim deduction on the whole 10 thousand under section 80TTA. Keep in mind that if you have also taken advantage of the exemption, then during the return filing, please give information about it in ‘Exempt Income’.