Monday, September 25, 2023

IBA filed a suggestion to the Finance Ministry to shorten the lock-in period of bank FDs from 5 to 3 years

Lock-in of bank FDs: Interest rates on bank FDs have been steadily declining, and they are no longer proving to be beneficial in terms of tax savings, therefore investors are looking for other options, which is why the IBA has taken this step.

FD Updates: The Indian Banks Association (IBA) has handed the Finance Ministry a recommendation addressing bank fixed deposits. According to the IBA, its regulations should be revised in Budget 2022. The lock-in period for bank FDs should be lowered from 5 to 3 years, during which time they should be tax-free.

According to the IBA, only by decreasing the lock-in period of bank FDs from five to three years and subsequently putting them into the tax net will FDs become attractive in comparison to other products, and investors would be able to give this choice more preference.

Three years should be the lock-in time for tax-saving FDs.

The IBA demands that tax-avoidance banks be established. A three-year lock-in period for FDs is also recommended. People will retain more money in the bank as a result of this, which has been steadily declining in recent years.

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The bank’s interest rate Banks have been reducing the rates of interest on FDs for some time now, and big banks currently only give 5-6 percent interest on FDs. These have dropped to a 10-year low, and as a result, most investors are withdrawing their bank savings and investing instead in the stock market or mutual funds.

Tax exemption is available only on investments in bank FDs for more than five years, and only on investments in bank FDs for more than five years, tax exemption is possible under section 80C of the income tax code, and all FDs are not taxed in this section. Get. Investors are also expressing less interest in bank FDs in this environment.

Why is there a higher level of investment in

The mutual fund’s ELSS Equity Linked Savings Scheme (ELSS) has a three-year lock-in period, after which the advantage of a tax exemption of Rs 1.5 lakh is accessible annually. Those who receive a one lakh benefit from an ELSS investment in a year are not required to pay any tax on it. As a result, more investors are turning to ELSS mutual funds to diversify their portfolios.



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