New Delhi. Counting days are left for the budget to come and banks have raised a special kind of demand for the interests of the customers. Indian Banks Association (IBA) has urged the Finance Ministry to reduce the tenure of tax free fixed deposits (FD) to 3 years instead of 5 years. If this demand is accepted by the government, then the lock-in period of FD will be 3 years.
IBA has said that there are attractive schemes like Equity Linked Saving Scheme (ELSS) in the market. These have a lock-in period of 3 years. Whereas in Fixed Deposit (FD), the lock-in time is 5 years. If this period is reduced to 3 years, then it will be attractive for depositors and funds will increase in banks. People will deposit more money in FD of banks. Banks have demanded special exemption from the government to promote digital banking.
What is ELSS and what are its benefits
Equity Linked Saving Scheme (ELSS) of Mutual Fund is a type of tax saving scheme. There is no tax up to Rs 1.5 lakh deposited in this. This benefit is available under section 80C of Income Tax. Since the returns of this scheme related to mutual funds are better than keeping it in the bank and the lock-in period is also less, then people show more inclination towards this scheme than banks. IBA has said that similarly tax saving bank FDs should also have a lock-in time of three years.
These are some other demands too.
Banks have also said that many campaigns are run for the betterment of the weaker section of the society. The government runs many of its schemes through banks. Digital banking is promoted. Ease of doing business is getting easier due to the efforts of banks, the services of digital banking have increased the facilities of the people. Therefore, the government should give some special tax rebate or deduction on the expenses of the banks. Banks have demanded to make a better system for quick disposal of tax related complaints. The organization has said that the appeal between the banks and the government needs to be heard and disposed of.
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