Monday, June 13, 2011

Taxability of Interest on Bank/Post Office Saving Account

As per new Notification No. 32/2011[F.No.173/13/2011-ITA.I]/S/O/1296(E), Dated 03.06.2011 of Income Tax Act.  Interest on Saving Account with Post Office will be exempted to a limited extent u/s 10(15)(i).  There will be no effect on Interest on Banking Saving Account. It means  Interest on Saving Bank account will be taxable and Interest on Post Office Saving Account will be exempted upto Rs. 3500/- in case of individual account and will be exempted upto Rs. 7000/- in case of Joint Account. Detailed Notification is given as under :-


SECTION 10(15)(i) OF THE INCOME-TAX ACT, 1961 - EXEMPTIONS - INCOME BY WAY OF INTEREST, ETC. , ON BONDS, SECURITIES - SPECIFICATION OF BONDS, SECURITIES , ETC., ISSUED BY CENTRAL GOVERNMENT - AMENDMENT IN NOTIFICATION NO.G.S.R. 607(E), DATED 9-6-1989

NOTIFICATION NO. 32/2011[F.No.173/13/2011-ITA.I] /S.O.1296(E), DATED 3-6-2011

In exercise of the powers conferred by sub-clause (i) of clause (15) of section 10 of the Income-tax Act, 1961 (43 of 1961) the Central Government hereby makes the following amendment to the notification of the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i), vide number G.S.R. 607(E), dated the 9th June, 1989, namely :—

In the said notification, in the Table, for serial number 9 and the entries relating thereto, the following serial number and entries shall be substituted, namely :—
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1                      2                                                                                            3
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"9. Post Office Savings Bank Account             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"
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2. This notification shall come into force from the date of its publication in the Official Gazette.

 

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