Bank & Post office Saving Interest Tax liability

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, Government has capped the exemption given on Post office saving Bank account to Rs 3500/- for individual account and Rs 7000/- on Joint account per annum . Earlier interest form post office saving Bank was exempted fully. It is important to mention here that Interest from normal saving Bank account opened in banks is fully taxable. 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 :—

"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"

This notification shall come into force from the date of its publication in the Official Gazette.

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