Many people do not consider savings accounts as a tax-saving tool, but did you know that a Post Office Savings Account (POSA) offers better tax benefits compared to bank savings accounts? This advantage applies to both the old and new tax regimes, making it an attractive option for investors looking to save money.
Indian taxpayers can avail tax deductions on interest income up to ₹10,000 under Section 80TTA. This deduction is applicable on interest earned from both bank and post office savings accounts. However, it is important to note that this benefit is available only to individual taxpayers and Hindu Undivided Families (HUFs), while companies and firms are not eligible.
For senior citizens, the government provides additional tax relief under Section 80TTB, allowing them to claim deductions on interest income up to ₹50,000. This benefit extends to savings accounts, fixed deposits (FDs), and recurring deposits (RDs) as well.
Investors in Post Office Savings Accounts receive an extra tax exemption under Section 10(15)(i) in addition to the deductions available under Sections 80TTA and 80TTB:
₹3,500 tax exemption for individual accounts
₹7,000 tax exemption for joint accounts
Under the new tax regime, deductions under Sections 80TTA and 80TTB are not available. However, the tax exemption under Section 10(15)(i) for Post Office Savings Accounts remains applicable. This means even under the new tax system, taxpayers can still claim ₹3,500 (single account) and ₹7,000 (joint account) in tax benefits.
Here’s how you can take full advantage of the tax benefits:
For regular taxpayers – Invest in a Post Office Savings Account and claim ₹10,000 (80TTA) + ₹3,500 (10(15)(i)) = ₹13,500 in tax deductions.
For senior citizens – Invest in a Post Office Savings Account and claim ₹50,000 (80TTB) + ₹3,500 (10(15)(i)) = ₹53,500 in tax deductions.
Open a joint account – If a couple opens a joint account, they can benefit from an extra ₹7,000 in tax exemption.
A Post Office Savings Account is not just a savings tool, but also a powerful tax-saving instrument. While bank savings accounts offer tax exemptions only up to ₹10,000, a Post Office Savings Account provides additional exemptions ranging from ₹3,500 to ₹7,000. If you're looking for a secure investment option with guaranteed interest and tax benefits, a Post Office Savings Account can be an excellent choice for your financial planning.
Stay informed and make smart financial decisions to maximize your savings and reduce your tax burden!
