You can also avail tax exemption on investments in the new tax system . You can avail this exemption through Post Office Savings Account (POSA). This facility is not available in bank savings accounts.
Let us tell you that the post office offers better interest rates than most banks, which along with these tax benefits is an attraction for customers seeking higher returns on their savings. Let us know how you can earn more along with income tax exemption by opening a Post Office Savings Account (POSA).
You can avail discount up to 10 thousand
The Post Office Savings Account (SB) works just like a normal bank savings account, with a minimum deposit amount of Rs 500 and a minimum withdrawal amount of Rs 50. There is no maximum investment limit and investors can enjoy tax exemption up to Rs 10,000. This account also offers an interest rate of 4% for the period April-June 2025.
Under the Income Tax Act, 1961, POSA provides tax exemption on interest income under section 10(15)(i), which is applicable under the new tax regime. This exemption allows a single account holder to claim a tax deduction of up to Rs 3,500 and a joint account holder up to Rs 7,000, which is over and above the normal tax deductions available for savings accounts.
Tax Deduction under Section 80TTA
Tax deductions under Section 80TTA allow general taxpayers to claim up to Rs 10,000 on interest income from savings accounts. This is applicable to accounts with banks, cooperative societies and post offices. For senior citizens, a higher deduction of up to Rs 50,000 is available under Section 80TTB. These deductions cover interest earned from savings accounts, fixed deposits and recurring deposits, providing significant relief to senior citizens compared to other taxpayers. However, these deductions are not applicable under the new tax regime.
Higher interest than banks
The interest rates offered by post office savings accounts are typically higher than those offered by banks, making them a better option for investors seeking better returns. This is especially important in the current economic environment, where savers look for safe and profitable options. The strategic position of POSAs, along with their competitive rates and tax benefits, makes them a better choice for many individuals.
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