Will Govt Give Income Tax Break On FDs?

A proposal submitted to the Finance Ministry, if included in next year’s budget could mean a big break for the middle class. The Indian Bank Association (IBA) is said to have petitioned the Finance Ministry to exempt income tax on interest earned from Fixed Deposits of up to Rs 5 lakh. Indian banks have been witnessing a much slower growth in deposits than in credit with a lot of people preferring investments in mutual funds and high-return insurance schemes. Currently, FD interest is taxed on the basis of the tax payee’s income slab. The only exemptions available on bank interest are under section 80TTA for individuals and 80TTB for senior citizens.