Interest exemption on PO Saving Bank a/c limited to 3500/- per year

Govt has capped the exemption given on Post office saving Bank account
to Rs 3500/- for individual account and Rs 7000/- on Joint account per
annum . Earlier interest form post office saving Bank was exempted
fully. It is important to mention here that Interest from normal
saving Bank account opened in banks is fully taxable

NOTIFICATION NO. 32/2011 ([F.No.173/13/2011-ITA.I] /S.O.1296(E)DATED 3-6-2011

In exercise of the powers conferred by sub-clause (i) of clause
(15) of section 10 of the Income-tax Act, 1961 (43 of 1961) the
Central Government hereby makes the following amendment to the
notification of the Government of India in the Ministry of Finance,
Department of Revenue, Central Board of Direct Taxes, published in the
Gazette of India, Extraordinary, Part II, section 3, sub-section (i),
vide number G.S.R. 607(E), dated the 9th June, 1989, namely :—

In the said notification, in the Table, for serial number 9 and the
entries relating thereto, the following serial number and entries
shall be substituted, namely :—

"9. Post Office Savings Bank Account To an extent of the interest of
Rs. 3,500 in the case of an individual account and Rs. 7,000 in the
case of joint account"

2. This notification shall come into force from the date of its
publication in the Official Gazette.