New Delhi: Do you know that interest earned on post office savings account up to Rs 3,500 in a financial year is tax exempt? Interest up to Rs 3,500 is exempted from tax in case of individual account, while interest up to Rs 7,000 can be availed by the joint account holder. Post office savings accounts are currently offering 4 per cent per annum, while the minimum amount required to open an account is Rs 500.
what makes Post Office Savings Account Attractive?
This 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 currently at historic lows. The interest rate on State Bank of India (SBI) savings account is 2.7 percent while on post office savings account you get 4 percent interest.
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In case of savings bank account, a person can claim a deduction of up to Rs 10,000 on the interest earned.
Interest on Post Office Savings Account is calculated after computing the minimum balance between the 10th of every month or the last day of the month. However, ensure that if the balance is not increased to Rs.500 at the end of the financial year, Rs.100 will be deducted as account maintenance charges, and the account will be automatically closed if the account balance becomes zero. Will go
Small savings instruments have been one of the most preferred instruments among retail investors as they generally offer higher interest rates than 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 not made any change in the interest rate on small savings schemes.
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