Nirmala Sitharaman: If Finance Minister Nirmala Sitharaman accepts the suggestion given by the banks, then this time there can be relief from tax on interest received on FD. If the government takes this step, then it can increase the cash flow in the banks.
Budget 2025 Expectations: The budget will be presented by the government soon. Both tax payers and non-tax payers are sitting with high hopes about the budget to be presented by Finance Minister Nirmala Sitharaman on February 1. Before the budget, there is a discussion that if you make FD in the bank, then the tax on it will be less or perhaps not applicable. Till now, tax is levied on the interest received on FD. But there is a demand from the banks that the tax on FD should be removed. Banks say that if the government decides to remove the tax, then it will encourage bank deposits.
Demand for tax incentive on FD
If this announcement is made by the Finance Minister, then it will greatly benefit those people who fulfill their needs by depositing money in the bank and earning interest on it. The news published on News 18 English claimed that in the pre-budget meeting with Finance Minister Nirmala Sitharaman, financial institutions, especially banks, have demanded tax incentives on fixed deposits (FD). They argue that this will increase savings. This suggestion from the banks has come due to the recent decrease in savings. This is the reason why banks are facing a shortage of money to give loans.
Less tax on investing money in the stock market
According to reports, MD and CEO of Edelweiss Mutual Fund Radhika Gupta gave suggestions to improve the efficiency and inclusiveness of the capital market in a pre-budget meeting with the Finance Minister. He said that recommendations were made to promote long term savings in bonds and equity shares. According to reports, the Finance Secretary, Department of Investment and Public Asset Management (DIPAM) Secretary, Department of Economic Affairs and Financial Services Secretary, and Chief Economic Advisor also attended this meeting. Banks have told the government that if you deposit money in the bank, then the tax on it should be less because there is less tax on investing money in the stock market. This suggestion was given so that people deposit more and more money in the bank.
How will it be beneficial?
If a person has an FD of Rs 10 lakh and is getting 8 percent interest on it annually, then he will get a total interest of Rs 4 lakh in five years. Suppose if he falls in the 30 percent income tax category, then there is no tax on FD interest up to Rs 40,000. Tax on the amount above this limit will have to be paid according to this slab rate. According to the current rules, he will have to pay 30% tax on Rs 3.60 lakh, which is Rs 1.08 lakh. But, if the tax (LTCG) on investing money in the stock market is applicable here, then he would have to pay only 12.5% tax, i.e. a total of Rs 45,000. In this way, he gets a benefit of about Rs 63,000.
