Tax-free limit on post office saving scheme may be increased soon
October, 21st 2008
The subscribers of the post office savings scheme, which attracts tax-free interest accrued on deposits of Rs one lakh and Rs three lakh on single and joint accounts respectively, may have a reason to cheer soon. The finance ministry is closely looking at a proposal for upward revision of the tax-free interest deposit limit.
The parliamentary standing committee on information technology that tabled its report on Management of funds by department of posts through banking and insurance activities has strongly recommended an upward revision of the ceiling limit, in keeping with the proposal of the postal department. It has said that a suitable increase in the limit would be a definite addition attracting more depositors in the post office savings scheme.
Earlier, the postal department had requested the finance ministry to raise the existing deposit limit on which subscribers can avail tax-free interest. The finance ministry, in turn, took up the matter with Central Board of Direct Taxes (CBDT) and asked for increasing the current limit to Rs 3 lakh. However, CBDT has been opposing the demand by saying that the proposed move would cause revenue losses.
Making out a strong case for an upward revision of the current ceiling, the committee has said that such a move would stem the declining number of depositors in this scheme. In fact, the committee lashed out at the postal department and has asked it to take corrective measures to revive this scheme as the foremost investment option.