High-value term deposits in banks may not be subjected to tax deducted at source (TDS) if the finance ministry agrees to proposals made by banks on Thursday. In a pre-budget meeting with Finance Minister Pranab Mukherjee, bankers proposed that the limit on interest from deposits beyond which TDS is required to be deducted be increased from Rs 10,000 to Rs 50,000 considering the surge in volume of transactions and inflation over the last few years.
The banks also a taxation window for pension funds and long-term funds. A demand was made to make banks eligible to issue tax-free infrastructure bonds. They also called for abolition of the Securities Transaction Tax. Some bankers said borrowers should be incentivised to convert jewellery into assessed gold.
An official with another bank confirmed that they had demanded the tenure for banks deposits be eligible for income-tax rebate should be brought down to three years from the current five years.
“We have also said that banks should be allowed to float infrastructure bonds and the exemption limit under them should be increased to Rs 50,000 from the current limit of Rs 20,000,” he said.
This proposal is in the right direction by Bank. Today enen a simple VRS peoples are required to live in Interest Income how can it be limited to Rs.10,000/- per annum and cover under TDS. Peoples money is trapped w/o claim by the TDS payee.
If Rs.50,000/- interest is raised then it is a great relief and increase savings in one window. I hope the Interest limit will be raised to Rs.25,000/- atleast given the scenario.
Some of the co-operative banks are not deducting TDS for interest paid on Fixed Deposit even more than limit of Rs.10000/- , are they exempted from TDS or they are voilating the TDS rules, please confirm.