No Tax on Bank FD: A lot can be announced in the upcoming budget to give relief to the common man. In the meeting with the Finance Minister, banks have raised the demand to abolish income tax on FD. If this happens, then thousands of rupees of investors will be saved every year.
No Tax on Bank FD: It seems that the days of bank FD are going to be better again. When the government presents the Budget 2025 on February 1, there is a possibility of getting big relief on it. Currently, tax is levied on the interest received on bank FD (Fixed Deposit) according to the income tax slab of the taxpayer. Banks have appealed to the government to abolish this income tax on FD. If this happens, then the common man will get a huge profit on getting FD.
In a meeting with Finance Minister Nirmala Sitharaman before the budget, financial institutions, especially banks, have suggested tax incentives on FD to promote savings. In recent times, amid a decrease in savings, banks had a problem of funds to distribute loans. To avoid this in the future and to make people invest in bank FDs again considering them a profitable deal, it is necessary that they are given some incentives.
Facility sought on bonds and shares as well
Radhika Gupta, Managing Director and Chief Executive Officer (CEO) of Edelweiss Mutual Fund, also gave suggestions regarding improving the efficiency of the capital market and increasing capital market inclusion during the pre-budget meeting with the Finance Minister. She said that recommendations have been made to encourage long-term savings i.e. both bonds and equity shares. The meeting was also attended by the Finance Secretary and DIPAM (Department of Investment and Public Asset Management) Secretary, Department of Economic Affairs and Financial Services Secretary and Chief Economic Advisor.
Long term capital gain tax will be levied on FDs
Sources say that bank representatives have suggested linking FDs with long term capital gain tax (LTCG) instead of taxing them according to the income tax slab, so that deposits can be encouraged. Currently, income tax is levied on the returns received from fixed deposits. Due to this, people invest their savings in low tax options like mutual funds instead of investing in fixed deposits.
How will you get the benefit of this
Suppose you have made an FD of Rs 10 lakh and you are getting an annual interest of 8 percent. You got a total interest of Rs 4 lakh on this FD made for 5 years. Suppose you fall in the 30 percent income tax slab, then there is no tax on the interest of FD up to Rs 40 thousand, above that you will have to pay tax according to the slab. This means that you will have to pay 30% tax on Rs 3.60 lakh. In this way, you will have to pay Rs 1 lakh 8 thousand only as tax. If LTCG is applicable on this, then you will have to pay a lump sum tax of 12.5 percent and the total tax will be only Rs 45 thousand. In this way, you will save about Rs 63000.
