MUMBAI
:
Though the new tax regime offers a simpler framework by eliminating deductions and exemptions, some incomes are still eligible for tax benefits.
One such income is the interest on post office savings accounts. Under the new regime, taxpayers can claim a tax exemption of up to ₹3,500 on a single account and up to ₹7,000 on a joint account under Section 10(15) of the Income Tax Act.
While deductions under Sections 80TTA and 80TTB—applicable to interest from savings accounts—are no longer available in the new regime, certain exemptions under Section 10 continue to be valid.
“Interest earned in statutory provident funds under Section 10(11), recognized provident funds up to 9.5% under Section 10(12), Sukanya Samriddhi accounts under Section 10(11A), and Post Office savings accounts under Section 10(15) is exempt under the new tax regime,” said Abhishek Kumar, a Sebi-registered investment advisor and the founder of SahajMoney.
“Interest from post office savings accounts continues to be exempt under Section 10(15), and this is applicable under both the old and new tax regimes,” added Kinjal Bhuta, a chartered accountant and the secretary of Bombay Chartered Accountants’ Society.
How to claim?
“Taxpayers are not required to add this exempt income to their gross taxable income,” said Kumar. “However, they must report it as ‘exempt income’ in their income tax return (ITR) form.”
If the interest earned exceeds ₹3,500 for an individual account or ₹7,000 for a joint account, the excess amount is taxable and must be declared under ‘income from other sources’.
How to Invest?
Opening a post office savings account is straightforward and can be done both online and offline. According to Kinjal Bhuta, the steps are as follows:
Step 1: Visit the nearest post office branch.
Step 2: Obtain and fill out the account opening form. Forms are also available for download from the official India Post website.
Step 3: Submit the form, along with know your customer (KYC) documents such as Aadhaar and PAN.
Step 4: Deposit the minimum required amount to activate the account.
It takes 2-3 working days to open an account.
“As per the latest notification from the ministry of finance, Aadhaar and PAN are mandatory for opening a new post office savings account. If Aadhaar hasn’t been issued yet, one must provide proof of Aadhaar enrollment and furnish the Aadhaar number within six months,” Kumar added.
Any resident Indian aged 10 years or above can open an account. Minors can have accounts opened by parents or guardians.
Things to remember
While the process is mostly hassle-free, some procedural quirks remain. “There is a penalty of ₹50 plus GST annually if the minimum balance of ₹500 is not maintained,” added Kumar.
Failure to make any transaction in the post office savings account for three fiscal years also makes it dormant, and one needs to do the KYC again to revive it.
Still, post office accounts remain an attractive option for many, especially those looking for low-risk savings and tax efficiency. The interest rate on post office savings accounts is 4%.