Tax Deduction on Saving Account: Everyone has a savings account, but do you know that this account can also give you the benefit of tax exemption. If you choose the old income tax regime, then you get tax exemption on the interest of the savings account.
New Delhi. The current financial year will end in just one month and with the start of the new financial year, the rush to file income tax returns will also begin. With this, the struggle to save every penny in the name of tax will also begin. Some will try to save their tax in the name of investment and some in the name of expenditure, but do you know that you can also get the benefit of tax exemption on savings account. Very few people know about this that how can you save tax on savings account.
All the government and private banks of the country give interest to the customers who open savings account. This interest keeps getting added to the account of the account holder every quarter. Most of the government banks currently give 2.5 percent to 4 percent interest on savings account, while some private banks offer interest up to 7 percent. On this basis, tax is levied on the interest received in your account.
How do you get interest on savings account?
Banks calculate interest on your savings account on daily basis and credit it to your account every quarter. This is done because transactions keep happening continuously from your savings account and banks pay interest on daily basis. Suppose, you have Rs 1 lakh in your account on 1st date and it reduces to Rs 50 thousand on 10th date, then the bank will also pay you interest on Rs 1 lakh from 1st to 9th date and after that interest will be calculated on Rs 50 thousand. All these interest amounts will be added and credited to your account every quarter.
How is tax levied on this
Under Section 80TTA of Income Tax, tax can be claimed on the interest earned on savings account. While filing income tax return, you have to enter the information of interest earned on savings account in the ITR form and tax exemption is claimed on it. Every taxpayer gets tax exemption of up to Rs 10,000 on savings account, which is given by combining all the accounts. Senior citizens have got a big relief in this matter and they do not have to pay tax on interest up to Rs 50,000 received on savings account.
You can withdraw refund from the bank
Banks deduct 10% TDS before depositing interest money in your savings account. So, if your total income remains outside the scope of tax even after receiving interest, then you can withdraw the TDS deducted earlier from the bank by filling Form 15G. To get this refund, you have to fill the form directly in the bank and also give its details in your ITR form.
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