Maturity of tax free FD should be done for 3 years, know what are the demands of small bank customers
The general budget is being presented on February 1 and the banking sector has also put forth its demands, so that banks can also be kept strong among emerging investment instruments like stock market and cryptocurrencies. Banks have suggested reducing the tenure of fixed deposits (FDs) to 3 years for tax benefits on equity linked savings schemes (ELSS) like mutual funds. Whereas FD schemes with tenures of five years offer tax benefits . Any person can claim income tax deduction under section 80C of the Income Tax Act, 1961 by investing money in a 5-year FD scheme.
Tax exemption under section 80C can be availed by investing in various heads to the extent of Rs 1.50 lakh. Indian Banks’ Association (IBA) said in a pre-budget proposal that FDs have become less attractive than other financial products (ELSS) available in the market for tax exemption. If the lock-in period is reduced, it will make the scheme more attractive and banks will get more funds. The IBA said in its proposal that the lock-in period should be reduced from the current five years to three years.
In the budget proposal, banks have also demanded measures for financial inclusion and special exemption for the expenditure incurred on promoting digital banking. Banks want a special dispute resolution mechanism to be put in place for speedy disposal of matters related to taxation. Ashwini Rana of Voice of Banking, an organization related to the interests of banking customers, says that the government had increased the guarantee on the amount deposited in bank accounts from Rs 1 lakh to Rs 5 lakh, which is welcome. But the government should bring an insurance scheme with a nominal premium to protect the entire amount deposited in the bank account, so that the bank does not drown the consumer’s hard earned money. Like home, vehicle and other things are insured.
Along with this, a demand has also been made not to reduce the interest rates on small savings schemes, so that the investment interests of small-cap depositors and senior citizens can be protected. Apart from this, it has been suggested to create a dedicated portal for complaints related to banks like Banking Ombudsman (Ombudsman). So that the customers do not have to wander and the complaint gets resolved in time.