Latest news with #Section80TTA
Mint
17-07-2025
- Business
- Mint
Income Tax FY 2024-25: How senior citizens can save more under these key provisions
As income tax return filing for Financial Year (FY) 2024-25 gains traction, taxpayers across the nation, especially senior citizens, are looking for ways to reduce and bring down their overall tax liability. Two key provisions of the Income Tax Act i.e., Section 80TTA and Section 80TTB provide deductions on the interest income for those selecting the old tax regime. Section 80TTA permits individuals below 60 years of age and Hindu Undivided Families (HUFs) to claim a deduction of up to ₹ 10,000 on interest earned from savings accounts held in banking institutions, post offices or cooperative societies. This particular benefit applies only if the taxpayer files under the old tax regime. Furthermore, this deduction does not apply to fixed or recurring deposits. Senior citizens who are aged 60 and above can claim deductions of up to ₹ 50,000 under Section 80TTB. These deductions are permitted on interest earned from savings, fixed deposits, recurring deposits with banking institutions, post offices or cooperative banks. Explaining the same point further, CA Sonu Jain, Chief Risk and Compliance Officer, 9Point Capital said, 'Senior citizens can save more tax under the old regime using Section 80TTB, which allows a deduction of up to ₹ 50,000 on interest from both savings accounts and fixed deposits. In contrast, those below the age of 60 get ₹ 10,000 under Section 80TTA,' He further added that, 'Senior citizens should also be cautious of the fact that this benefit isn't available if the new regime is opted for when filing the ITR.' It is critical to keep in mind that under the new tax regime applicable in FY 2024-25 and beyond, deductions under Section 80TTA and 80TTB are not permitted. That is why keeping the same thing in mind, taxpayers should carefully evaluate whether to opt for the lower slab rates under the new regime or simply stick with the old regime to claim the benefit of these exemptions. In the case of taxpayers with high interest income, especially senior citizens, remaining in the old regime may provide greater benefits in FY 2024-25. Keeping the same points in mind, the tax saving potential of Section 80TTB makes it a crucial component of financial planning especially for retired government employees. Further, those relying heavily on interest income for meeting their monthly expenses should check and analyse the long term tax implications before switching regimes as the old regime permits more flexibility through numerous deductions. Disclaimer: This article is for informational purposes only and should not be considered financial or tax advice. Readers are advised to consult a qualified tax professional before making any decisions related to investments and income tax planning.
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Business Standard
13-05-2025
- Business
- Business Standard
Not into stocks? Post office savings schemes could be worth an investment
With growing financial volatility and fluctuating market-linked returns, a large section of the Indian population is turning back to the age-old method of investment- the post office. India Post's small savings schemes are witnessing renewed interest for their government backing, steady returns, and easy accessibility, even in the country's most remote corners. These schemes, administered by the Department of Posts under the Ministry of Communications, offer a blend of security, tax benefits, and reasonable interest rates. Here's a breakdown of the most popular savings and investment instruments currently offered by the post office. Savings account Much like a traditional bank account, the Post Office Savings Account is a low-risk, interest-bearing deposit option. Currently offering 4 per cent annual interest, this account requires a minimum balance of Rs 500. With no maximum limit, it is open to individuals, joint holders, and minors above 10 years. The interest is tax-exempt up to Rs 10,000 under Section 80TTA. Accounts become dormant after three years of inactivity, but can be revived. One notable caveat: only one single account is allowed per person. Recurring deposit The 5-Year Recurring Deposit (RD) scheme is popular among middle-income households seeking to build a corpus through monthly savings. Offering a 6.7 per cent annual interest, compounded quarterly, it allows investors to start with as little as Rs 100 per month. Defaults incur minimal penalties, and after 12 monthly deposits and one year, subscribers can avail a loan of up to 50 per cent of the balance. Premature closures are permitted after three years, although with adjusted interest. Time deposit Post Office Time Deposits (TD) offer guaranteed returns at rates that rival those of commercial banks. The current rates (Jan–Mar 2024 quarter) range from 6.9 per cent to 7.5 per cent, depending on the tenure selected— 1, 2, 3, or 5 years. The 5-year TD offers the highest return at 7.5 per cent, and qualifies for Section 80C tax deductions. Premature withdrawal is allowed after six months, although interest penalties apply. Monthly income scheme For those seeking a steady income post-retirement or a low-risk investment with monthly payouts, the Monthly Income Scheme (MIS) offers 7.4 per cent annual interest, disbursed monthly. With a maximum investment limit of Rs 9 lakh (single) and Rs 15 lakh (joint), MIS has a fixed tenure of five years. Premature withdrawals are allowed with penalties— 2per cent if closed after one year, 1per cent after three years. While interest is taxable, the certainty of monthly returns attracts conservative investors. Sukanya Samriddhi Yojana Aimed at encouraging financial planning for a girl child's education and marriage, the Sukanya Samriddhi Account offers an unmatched 8.2 per cent annual return. Guardians can open the account for a girl under 10 years of age, with a minimum annual deposit of Rs 250 and a maximum of Rs 1.5 lakh. Deposits are allowed for 15 years, and the account matures after 21 years or upon marriage (after 18 years of age). The scheme enjoys triple tax benefits—exemptions on principal (under Section 80C), interest, and maturity proceeds. Public provident fund The Public Provident Fund (PPF) continues to be a favourite among long-term investors. Backed by the government and offering 7.1 per cent interest, it requires a minimum deposit of Rs 500 annually, up to a maximum of Rs 1.5 lakh. With a lock-in of 15 years, extendable in 5-year blocks, the PPF also permits loans and partial withdrawals during the tenure. All returns—interest and maturity—are fully tax-free, making it an excellent tool for tax planning and retirement savings. A growing appetite for certainty While market-linked instruments like mutual funds and equities continue to attract younger, risk-tolerant investors, India Post's savings schemes offer a vital safety net, especially for senior citizens, rural populations, and conservative savers. As financial awareness deepens and digital access to postal banking improves, these schemes are slowly shedding their old-school image and emerging as reliable components of a balanced financial portfolio.
