SBI wants tax parity on bank FDs with mutual funds & equity markets in Budget
SBI) has sought income tax parity on bank fixed deposits (FDs) in line with other asset classes in Budget 2024.
«In line with mutual funds and equity markets, we propose that the government should tweak the 'tax on deposits interest' and make flat tax treatment across maturity ladder,» Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said in his suggestions for the Union Budget 2024 which would be presented by Finance Minister Nirmala Sitharaman in the Parliament on July 23.
Under the current income tax regime, short-term capital gains in equity and MF holdings are taxed at a flat rate of 15%, while long-term capital gains (LTCG) are taxed at a moderate 10%, with exemption allowed till income of LTCG up to Rs 1 lakh during a given financial year.
Also, the setting-off of loss against profits and carrying over the loss up to the next eight years make the opportunity cost of such investments quite lucrative.
«Household net financial savings has declined to 5.3% of GDP in FY23 and is expected to be 5.4% in FY24. If we make the deposit rate attractive in line with MFs, then this could push up household financial savings and CASA. As this amount will be in the hand of depositors, it could unleash additional spending and thereby additional GST revenue to the government,» SBI Research said.
An increase in bank deposits will bring not only stability in the core deposit base and financial system but also financial stability in household savings as the banking system is better regulated and has a superior trust
