The Government has decided to levy tax on the interest obtained on Post Office savings schemes from the current financial year.

The Central Board of Direct Taxes (CBDT) has brought out a notification in this regard recently, which stipulates that any interest earned beyond Rs 3,500 (in the case of individual accounts) and Rs 7,000 (in the case of joint accounts) will be taxable from the running fiscal.

The CBDT — which is the administrative authority of the Income-Tax Department — has issued the notification to all the tax collection ranges across the country for implementation.

Taxpayers will have to reflect this investment on their income-tax returns.

“Taxpayers, who now invest in the post office saving accounts scheme, will now have to show the interest earned on this scheme while filing their income-tax returns. Interest up to Rs 3,500, in the case of single accounts and Rs 7,000 in the case of joint accounts, is exempted,” a senior I-T official said.

The Assessing Officer (AO) will compute the tax on the interest earned, beyond the exemption limit, accordingly, he said.

The current interest rate for Post Office savings deposits is 3.5 per cent per annum. The minimum investment limit in this scheme is Rs 50 while the maximum limit is Rs one lakh for an individual account and Rs 2 lakh in the case of a joint account.

(This article was published on June 16, 2011)
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