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Tax exemption on postal savings account interest capped at Rs 3,500
June, 20th 2011

will now have to pay tax on interest earned beyond Rs 3,500 on a postal savings bank account. In a recent decision, the Central Board of Direct Taxes, the apex direct taxes body, withdrew the blanket exemption enjoyed hitherto by the scheme.

The exemption will be available only on interest earned up to Rs 3,500 in case of individual accounts and Rs 7,000 in case of joint accounts from the current fiscal year itself. Experts say some of the concessions granted earlier had to be reviewed to see if they were in line with the current economic reality or had outlived their utility.

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