HEADLINES:
November 11 2019
PO savings a/c interest taxable
27 June 2011

Post office (PO) savings bank account holders who earn an annual interest of more than R3,500 from an individual account and more than R7,000 in case of a joint account will have to pay tax. In a recent notification, the Central Board of Direct Taxes, the apex direct taxes body, withdrew the blanket tax exemption enjoyed by post office savings banks, which will now be at par with bank savings accounts. The new rules are applicable with immediate effect and taxpayers will have to mention the interest earned in their income tax returns.

 

 

Post office savings bank accounts pay an interest rate of 3.5% per annum for both individual and joint accounts. An individual account holder can put up to R1 lakh and a joint account holder can put up to R2 lakh. The minimum amount is R50 for either of the accounts and one can avail cheque book facility. The interest is calculated on the balance amount in the account on the 10th of every month, unlike savings account in banks where the interest is calculated on the average daily balance, the new norm that was put in place last year. It was in 1989 that the government notified the tax exemption on the postal savings account.

 

 

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