Post office savings account: Interest rate, income tax rule that you should know

Post office savings account: ₹3,500 tax exemption for single post office savings account is an additional benefit that one can claim in one’s ITR after claiming ₹10,000 deduction available under Section 80 TTA of the income tax act

Post office savings account: Under Post Office Saving Schemes, one can open post office savings account but unlike bank savings account, here one can save income tax outgo up to ₹13,500 in one financial year. However, this ₹13,500 can become ₹17,000 if the post office savings account is a joint account. As per tax and investment experts, this is an additional income tax benefit that post office savings account holders can claim while filing income tax return (ITR).

Post office savings account interest rate

They said that when bank savings account interest rates are going around 3 per cent post office savings account interest rate is also 4 per cent per annum — around one third more return than bank savings account.

So, if an investor has low risk appetite, then he or she is advised to open a post office savings account and enjoy 33 per cent extra interest rate along with at least 35 per cent additional income tax exemption limit ( ₹13,500 instead of ₹10,000).

Speaking on the income tax exemption limit applied for post office savings account; Mumbai-based tax and investment expert Balwant Jain said, “Interest on savings bank account is presently exempt under section 10(15)(i) of the income tax act, vide notification no. G.S.R. 607(E) dated 9 June 1989. The said notification is amended to provide that such interest from Post Office Savings Bank Account will be exempt as follows — ₹3,500 in case of individual account, ₹7,000 in case of joint account.”

Balwant Jain went on to add that ₹3,500 tax exemption for single post office savings account is an additional benefit that one can claim in one’s ITR after claiming ₹10,000 deduction available under Section 80 TTA of the income tax act.

Advising post office savings account holder to declare ₹3,500 or ₹7,000 income tax exemption during ITR filing; SEBI registered tax and investment expert Jitendra Solanki said, “The post office savings account holder must declare this income tax exemption during ITR filing under ‘Exempt Income’ head, if the post office depositor has declared income tax exemption on the interest earned from its post office savings account.”