You may be aware of claiming an exemption of up to Rs 10,000 from your payable tax on the interest received on a savings bank account while filing IT under Section 80TTA. However, you can claim an additional deduction of Rs 3,500 on the interest earned on a savings account in a commercial bank or co-operative bank or a post office under section 10(15)(i) of the IT Act.
You can save up to Rs 7,000 in a financial year if you have a shared or joint savings account in a post office, according to a government notification released on June 3, 2011. Here’s how.
Under Section 10(15) of the Income Tax Act, you can exclude incomes that are not supposed to be part of your total income. In FY 2012-13, the government introduced Section 80TTA of the IT Act to provide exemption up to Rs 10,000 from interest received from savings accounts.
You can claim an exemption of up to Rs 10,000 on the interest income from your post office deposit account under Section 80TTA with an additional interest of up to Rs 3,500 under Section 10(15), but you cannot claim twice at the same time.
However, if you have an interest income of Rs 10,000, you can claim a deducted income of Rs 3,5000, wherein you can claim the remaining Rs 6,500 under Section 80TTA.
Besides, showing your interest income in the ITR (income tax return) depends on you claiming it as a tax exemption or deduction.
Under Section 80TTA, if you choose to claim it as a tax deduction, you are required to show the interest income under your basic salary or primary exempted income.
However, from FY21-22, as banks and post offices are required to send out the details of the interest received by the citizens to the IT department, it is likely to get all the required information pre-filled in tax forms.