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Expectations of Budget 2025: The central government will present the budget soon. Both taxpayers and non-taxpayers have high expectations from the budget to be presented by Finance Minister Nirmala Sitharaman on February 1. The middle class is likely to get big relief in the budget. Before the budget, there is a strong discussion that if you make a bank FD, the tax will be less or not equal. Till now the interest received on FD was taxable. But banks are demanding that tax on FD be removed. Banks say that if the government decides to remove the tax, it will boost bank deposits.
Demand for tax incentive on FD
If the Finance Minister makes this announcement, it will greatly benefit those people who deposit money in the bank and meet their needs with the interest earned on it. According to a report, in the pre-budget meeting with Finance Minister Nirmala Sitharaman, financial institutions, especially banks, have demanded tax incentives on fixed deposits (FD). This, he argued, would increase savings. This suggestion of banks has come in view of the recent decline in savings. This is the reason why banks are facing shortage of money to give loans.
Less tax on investing money in stock market
According to reports, Edelweiss Mutual Fund MD and CEO Radhika Gupta made suggestions to improve the efficiency and inclusivity of the capital market in a pre-budget meeting with the Finance Minister. He said recommendations were made to promote long-term savings in bonds and equity shares. According to the information received, the meeting was attended by Finance Secretary, Department of Investment and Public Asset Management (DIPAM), Secretary, Department of Economic Affairs and Financial Services and Chief Economic Advisor. Banks have told the government that if you deposit money in the bank then there should be less tax on it because there is less tax on keeping money in the stock market. This suggestion was given to encourage people to deposit 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 annually, then he will get a total interest of Rs 4 lakh in five years. Let’s say FD interest up to Rs 40,000 is tax free if it falls in the 30% income tax bracket. The amount exceeding this limit will have to be taxed as per the slab rate. According to the current rules, they have to pay 30 percent tax on Rs 3.60 lakh, which is Rs 1.08 lakh. But if LTCG is applicable here then he will have to pay only 12.5% tax, i.e. a total of Rs 45,000. In this way he makes a profit of about Rs 63,000.