Post Office Savings Scheme: How To Earn Big With New Tax Regime - Tips

Post Office Savings Accounts (POSAs) have become a popular choice for those opting for the new tax regime, offering advantages over regular bank savings accounts. While traditional savings accounts provide limited tax benefits, POSAs offer exemptions and higher interest rates, making them an appealing option for savers looking for better returns.

What is a Post Office Savings Account?

POSAs are established to encourage small-scale savings by offering competitive interest rates. With a minimum deposit of Rs 500 and withdrawals starting at Rs 50, these accounts are simple and flexible. As of April-June 2025, POSAs offer an interest rate of 4%, which is higher than many commercial banks.

Tax Benefits of POSAs

Exemption Under Section 10(15)(i)

POSAs allow an exemption on interest income up to Rs 3,500 for a single account holder and Rs 7,000 for a joint account holder, under Section 10(15)(i) of the Income Tax Act. This benefit is unique to POSAs and not available with regular savings accounts.

Tax Deductions Under Section 80TTA/80TTB

Section 80TTA: Taxpayers in the old tax regime can claim up to Rs 10,000 in deductions on interest income from savings accounts, including POSAs.
Section 80TTB: Senior citizens can claim up to Rs 50,000 in deductions on interest income from savings accounts and fixed deposits.

However, these deductions are not available under the new tax regime, which only allows exemptions under Section 10(15)(i) for POSAs.

 New Tax Regime Vs Old Tax Regime

Under the new tax regime, deductions under Sections 80TTA and 80TTB are not available, but the exemption for POSAs still applies. While the old tax regime still allows both the exemption (up to Rs 3,500 or Rs 7,000 for joint accounts) and deductions (Rs 10,000 or Rs 50,000 for seniors), providing more savings.

Benefit of Post Office Savings Account

Posa offers an attractive interest rates of 4 % compared to other bank saving accounts. Under the new tax regime, it also provides exemptions on interest rates, making it more beneficial. Additionally, it is backed by government with no upper investment limit.