Income Tax Saving: We all know that the entire interest income from a savings account does not come under tax. Under Section 80TTA of the Income Tax Act, 1961, a person below the age of 60 years or for HUF from a bank / co-operative society / post office savings account with interest income up to Rs 10,000 per annum is tax free. At the same time, in the case of people above 60 years, the interest up to Rs 50000 in a financial year from a savings account is tax free. This is under Section 80TTB of the Income Tax Act.
But very few people will be aware that under a section of the Income Tax Act, those holding Savings Account in the post office get some extra benefit in interest income. This section is 10 (15) (i). In fact, under section 10 (15) (i) of the Income Tax Act, the interest income from post office savings account is exempt from income tax up to a certain limit. This exemption is applicable in case of single account holder of Post Office Savings Account with annual interest income up to Rs 3500 and interest income up to Rs 7000 when the account is in the joint.
Post office: double benefit to tax payer
CA Yogesh Aggarwal says that it is worth noting that section 10 (15) (i) provides exemption from tax liability, whereas sections 80TTA and 80TTB provide deduction from taxable income. However, the taxpayer can get tax benefit of both section 10 (15) (i) and section 80TTA / 80TTB in the same year.
That is, the taxpayer can claim an exemption up to Rs 3500/7000 under section 10 (15) (i) first on the total annual interest income from the post office savings account. After that, you can claim a tax deduction of up to Rs 10000/50000 on the remaining interest income under section 80TTA / 80TTB.
How to get more out of bank account
If the bank has a savings account, the taxpayer can only claim tax deduction up to Rs 10000/50000 under section 80TTA / 80TTB on the annual interest income arising from it. On the other hand, if there is a savings account in the post office, then the tax benefit of up to Rs 13500/53500 on a single account and Rs 17000/57000 on the joint account is collected on section 10 (15) (i) and section 80TTA / 80TTB on taxpayer interest income.
Source: www.financialexpress.com