If you make an FD in the bank, then the tax on it will be less or probably not. At present, tax is levied on the interest earned on FD. But there is a demand from banks that the tax on FD should be removed. Banks say that if the government decides to remove the tax, it will encourage bank deposits. If this announcement is made by the Finance Minister, then it will be of great benefit to those people who deposit money in the bank and meet their needs with the interest received on it.
Demand for tax incentives on FDs
In a pre-budget meeting with Finance Minister Nirmala Sitharaman, financial institutions, especially banks, have demanded tax incentives on fixed deposits (FDs). This, he argues, will increase savings. This suggestion has come from banks due to the recent decrease in savings. This is the reason why banks are facing a shortage of money to lend.
How will it be beneficial?
If a person has an FD of Rs 10 lakh and is getting 8 percent interest per annum, then he will get a total interest of four lakh rupees in five years. Suppose if it falls in the income tax category of 30 percent, then there is no tax on the interest of FD up to Rs 40,000. Tax on the amount above this limit will be paid as per 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 on investing in the stock market (LTCG) is applicable here, then they have to pay only 12.5% tax, i.e. a total of Rs 45,000. In this way, they make a profit of around Rs 63,000.
