Interest from postal savings accounts is also taxable
Interest income of up to Rs 10,000, earned from all the savings bank accounts, either with a bank or banking company or with a cooperative society engaged in banking business, or a post office is exempt from tax
But one must also remember that this interest is liable to tax. Interest earned from saving accounts is considered as income under the head, 'income from other sources' and is taxed at the applicable slab rate in the hands of the individual. But all of this interest is not taxable.
From assessment year (AY) 2013-14, a new section - section 80TTA - was introduced in the Income Tax Act, 1961. Under this section, interest income of up to Rs 10,000/- earned from all the savings bank accounts, either with a bank or banking company or with a cooperative society engaged in banking business, or a post office-is exempt from tax.
The amount above Rs 10,000 in a financial year will be added to the other taxable income of the taxpayer, and will attract tax. For instance, if your interest income from various savings accounts (including at a post office) is Rs 8,000 this year, then you don't have to pay any tax on it. But if this total interest income is, say, about Rs15,000, then you need to pay tax on Rs 5,000 as per the tax slab applicable to you.
Disclose in Tax Return
Often, while filing tax returns, many individuals either ignore or fail to disclose their interest income. But irrespective of the amount of interest earned during a year, it should be disclosed in the income tax return.
This is a good practice because one should take advantage of the available tax deduction limit specified specially for such income and file the tax returns appropriately. Avoiding or ignoring to disclose savings account interest not only makes the income tax return incorrect, you may end up paying penalty and be required to revise your return if the income tax department traces this income during assessment.
Top 4 Tax Saver Mutual Funds for 2017 - 2018
Best 4 ELSS Mutual Funds to invest in India for 2017
1. DSP BlackRock Tax Saver Fund
2. Invesco India Tax Plan
3. Tata India Tax Savings Fund
4. BNP Paribas Long Term Equity Fund
Invest in Best Performing 2017 Tax Saver Mutual Funds Online
For further information contact SaveTaxGet Rich on 94 8300 8300
Leave your comment with mail ID and we will answer them
You can write to us at
Invest [at] SaveTaxGetRich [dot] Com
Call us on 94 8300 8300