Income Tax Act 2007 section 881

National Savings Bank interest

Section 881 provides an exemption from the requirement to deduct income tax at source for interest paid on National Savings Bank deposits.

• Section 874 normally requires income tax to be deducted at source from certain payments of yearly interest.
• Section 881 creates a specific exemption from this deduction requirement for National Savings Bank deposit interest.
• Interest on National Savings Bank deposits is paid gross, without any tax being withheld.
• The exemption applies automatically — no claim or election is needed.