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I want to keep 5 lakh in my savings account? Do I have to pay any tax?

Benefits of premature closure of small savings schemes would be introduced to deal with medical emergencies, and higher education needs among others, it said. Photo: iStockPremium
Benefits of premature closure of small savings schemes would be introduced to deal with medical emergencies, and higher education needs among others, it said. Photo: iStock

You do not have to pay any tax to the bank but the interest income from saving bank account is taxable like any other income. Individual taxpayers are allowed a deduction in respect of interest received on saving bank account

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Can I keep 5 lakh balance in my saving account? Do I have to pay any tax to pay to bank?

There are no restrictions as to the maximum amount you can keep in a saving bank account either under the income tax laws or under banking regulations but different banks have different rules as requiring the accountholders to maintain minimum balance in their saving account failing which they levy penalty for such non maintenance of minimum balance. You do not have to pay any tax to the bank but the interest income from saving bank account is taxable like any other income. Individual taxpayers are allowed a deduction in respect of interest received on saving bank account. 

All Individuals are entitled to claim a deduction of Rs. 10,000/- under Section 80TTA in respect of your interest income from saving bank account. Those individuals who are resident for tax purposes and have completed 60 years of age get a higher deduction of Rs. 50,000/- under Section 80TTB, in respect of any interest received from banks including interest on saving bank account. So if after claiming this deduction your total income along with saving bank interest exceeds the basic exemption, you have to file your ITR and may have to pay tax at the applicable slab. Even banks do not have to deduct any tax on the interest credited on saving bank account. 

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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