Did You Know Post Office Savings Account Interest Up To Rs 3,500 Is Tax Exempted? Check Other Details Here

The tax exemption along with the higher interest rate makes it more attractive than a bank savings account which is at historic low at present.

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New Delhi: Did you know that interest earned on a post office savings account of up to Rs 3,500 in a financial year is tax exempted? In the case of an individual account interest up to Rs 3,500 is exempted from tax while a joint account holder can avail the exemption on interest up to Rs7,000. Post office savings accounts are currently offering  4 percent per annum while the minimum amount required for account opening is Rs500.

What makes Post Office Savings Account attractive?

It is a beneficial scheme for retail investors looking to earn a fixed rate of interest. The tax exemption along with the higher interest rate makes it more attractive than a bank savings account which is at a historic low at present. The interest rate on the savings account of the State Bank of India (SBI) is 2.7 percent while a post office savings account offers you 4 percent interest.

In the case of a savings bank account, an individual can claim a deduction of up to Rs10,000 on the interest earned.

The interest on the post office savings account is arrived at after calculating the minimum balance between the 10th of every month or the last day of the month. However, make sure if the balance is not increased to Rs 500 at the end of the financial year, Rs 100 will be deducted as an account maintenance fee, and if the account balance became nil the account shall stands automatically closed.

Small savings instruments have remained one of the most preferred instruments among retail investors because they usually offer interest rates higher compared to instruments such as bank deposits or savings accounts. It is to be noted that the interest rates on small savings schemes including post office savings account are revised on a quarterly basis. For the July to September quarter, the government has kept the interest rate on small saving schemes unchanged.