When it comes to cover your immediate short-term needs a savings account is an interest-bearing account that can be picked as your personal finance partner. As a taxpayer, you may be aware that interest earned up to a limit of Rs 10,000 in savings account under Section 80TTA of the Income Tax Act is tax-deductible. And on the other hand, interest earned up to Rs 50,000 in a savings account by senior citizens can be claimed as a tax deduction under Section 80TTB of the Income Tax Act. But do you know you can claim tax benefits under Section 10(15)(i) of the Income Tax Act.? Here's How.
Tax benefit available under Section 10(15)(i) of the Income Tax Act
Interest earned from post office savings accounts is tax-free up to Rs 3,500 per year for single accounts, and up to Rs 7,000 per year for joint accounts, in addition to the deductions given to senior citizens under Sections 80TTA and 80TTB, according to a notification issued by the Government of India, dated June 3, 2011. According to the notification "To an extent of the interest of Rs. 3,500 in the case of an individual account and Rs. 7,000 in the case of joint account."
According to the above rule, a senior citizen under section 80TTA of the Income Tax Act can claim a tax deduction from a post office savings account up to Rs 10,000 or up to Rs 50,000 under section 80 TTB. Furthermore, under section 80TTA or 80TTB, the individual can seek a tax exemption benefit as per section 10(15)(i) on interest earned from a post office savings account up to Rs 3,500 for an individual account and Rs 7,000 for a joint account.
Furthermore, interest income in surplus of Rs 3,500 in a single account or Rs 7,000 in joint accounts may be deducted under Sections 80TTA and 80TTB. It's worth noting that the individual can't claim any other deduction for the same income if tax exemption has been claimed under Section 10(15)(i) of the Income Tax Act. If the individual is seeking a Section 10(15) tax exemption, he or she must report it under the heading 'Exempted Income' while filing his or her Income Tax Return.