Thursday, 14 July 2011

Income Tax on Post Office Savings Account

Post office savings account also attracts income tax from the current financial year. The Government has taken the decision in this regard and the Central Board of Direct Taxes (CBDT) recently issued a notification that the interest on Post office savings account also taxable above Rs. 3500 per year for single account and above Rs. 7000 per year for joint account.

The notification has been issued to all tax collection ranges across the country, for implementing this from the current financial year itself and also instructs that the taxpayers should show this in their income tax return form now onwards.

Post office savings Schemes are considered as Small and safe savings schemes which are designed as attractive investment options to the public and operated through all post offices all over India. Post office savings account is a good and reliable savings scheme and for rural people it allows a saving facility, where there are no other banking facilities. The amount invested can withdraw at any time and the minimum balance is Rs. 500 for check facility and Rs. 50 for account without check facility.

“Taxpayers who now invest in the post office saving accounts schemes will now have to show the interest earned on this scheme while filing their income tax returns. Interest up to Rs 3,500, in case of single accounts and Rs 7,000 in case of joint accounts, is exempted,” a senior I-T official said.

At present the post offices give 3.5% interest per year for the post office savings bank account and the minimum and maximum investment limit is Rs. 50 and Rs. 1 Lakh (Single account) Rs. @ Lakh (Joint Account) respectively.

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