Secret Income Tax Deduction Even in the New Tax Regime! Don’t Miss This Hidden Benefit

Most taxpayers believe the new tax regime under Section 115BAC means saying goodbye to deductions and exemptions. But here’s the surprise — not all benefits are gone.

Yes, you read that right. Even under the new tax regime, there’s a lesser-known exemption that the Income Tax Department still allows — and chances are, you’re eligible but unaware!

What’s the Hidden Deduction?

If you have a Post Office Savings Account, the interest earned on it is still exempt from tax — even under the new tax regime.

This benefit comes from a provision in the Income Tax Act, Section 10(15)(i). Here’s what it says in essence:

Interest earned on deposits in a savings account with a Post Office is exempt up to ₹3,500 for individual accounts and up to ₹7,000 for joint accounts per financial year.

✅ Yes — this exemption applies even if you’ve opted for the concessional tax rates under the new tax regime.

Legal Backing: Section 10(15)(i)

The Income Tax Act, 1961, under Section 10(15)(i), provides exemption for:

“Income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, or other instruments issued by the Government…”

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The CBDT and income tax portal both clarify that interest from Post Office Savings Account is part of the exempted income under this section, up to the limits mentioned.

How Much Can You Save?

Account Type	Exempt Interest Amount (per year)
Single Account	₹3,500
Joint Account	₹7,000

Important: This is an exemption, not a deduction — which means it directly reduces your taxable income, even if you don’t claim deductions like 80C, 80D, etc.

How to Report It?

When filing your ITR:

Declare the total interest earned from your PO savings account under “Income from Other Sources.”
Claim the exempt portion under Section 10(15)(i) in the “Exempt Income” schedule.

Why Most People Miss This?

Many assume that under the new tax regime, all exemptions are gone. But that’s not entirely true. The new regime restricts deductions under Chapter VI-A like:

80C (LIC, PF, PPF)
80D (Health insurance)
80TTA/80TTB (Savings account interest in banks)

However, this is an exemption, and not a deduction under Chapter VI-A, so it still survives.

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Final Thoughts

In a world where every rupee saved is a rupee earned, knowing about this tiny but meaningful exemption could be the smart move you didn’t know you needed.

So, if you (or your parents or spouse) have a Post Office Savings Account, make sure to use this hidden gem of a tax benefit!

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