Union Budget 2024: Finance Minister Nirmala Sitharaman may provide several tax reliefs to taxpayers in the upcoming budget. One of these reliefs could involve exempting tax on interest income earned from savings accounts in banks. The government is planning to announce this as a benefit.
In the budget, there may be a deduction benefit on income up to Rs 25,000 from interest on savings accounts. According to sources, the government is evaluating a proposal to increase the deductible amount for interest earned on savings accounts. Recently, Finance Ministry officials met with banks, where banks suggested increasing the tax benefit on savings account interest income. Government officials suggest that a decision on this could be announced in the upcoming budget.
If this relief is included in the budget, it can benefit both ordinary taxpayers and banks. Almost every taxpayer currently holds a savings account in a bank. This change would be advantageous for banks as they would attract more deposits from customers seeking higher returns.
Currently, under income tax regulations, taxpayers receive a partial exemption on interest earned from savings accounts. According to Section 80 TTA of the Income Tax Act, up to Rs 10,000 of this income is tax-free. For senior citizens aged 60 and above, the exemption limit is Rs 50,000. This includes interest income from fixed deposits under Section 80 TTB. These tax exemptions are applicable under the old tax system.
Under the new tax regime, taxpayers do not receive tax exemptions for interest earned on savings accounts. However, those with savings accounts at post offices can still benefit. They are exempt from tax on interest earned up to Rs 3,500 for individual accounts and up to Rs 7,000 for joint accounts.
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