look news india
Last week, a meeting was held between representatives of the banking sector and top officials of the Finance Ministry to discuss the upcoming budget.
In this meeting, the banking industry said that at present, a tax exemption of Rs 1,000 crore has been given on the interest received on savings accounts. The limit of Rs 10,000 has been increased. Rs 25,000 was proposed. Central government sources related to this development said that the government is seriously considering this proposal and a decision is likely to be taken soon. Sources said that an announcement in this regard will be made in the next Union Budget.
Banks reported that deposit growth is currently under extreme pressure and the credit-deposit ratio fell by more than 2 percentage points from 78.8 percent in December 2023 to 76.8 percent in March 2024. Moreover, private lending institutions are far ahead in getting deposits, making it very difficult for public sector banks to get deposits. Therefore, if this limit is increased by the government, the deposits may increase. According to sources, if the limit of tax exemption on interest earned in this type of savings account is increased from Rs. 10,000 to Rs. 25,000, after getting an estimate of how much the government's income may decrease, it is likely that the final decision will be taken before the budget. In accordance with the demand of banks, this limit has been increased to Rs. 200. 25,000 but this limit can be increased slightly.
Let us tell you that under Section 80TTA of the IT Act, this relief is available on the interest received on savings account and in the case of senior citizens, this limit is Rs 20,000. 50,000. This tax exemption limit for senior citizens also includes interest earned on FD.
What did the banks demand?
Under the old practice of taxation, the limit for tax exemption in respect of interest earned in savings account at present is Rs. 10,000, raised to Rs. 25,000
Under the new taxation regime, the benefit of tax exemption on interest income should be given under section 10(15)(1) of the IT Act.
Presentation of banks
Banks expressed concern over the decline in deposits
75% of the banks having credit deposit ratio more than 75% are private banks.