Latest Expert Exchange Queries

Make your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: empanelment :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: cpt :: ACCOUNTING STANDARDS :: form 3cd :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India
 
 
News Headlines »
 How to file tax return if you have two Form 16s
 10 things you should know about Form 26 AS
 How to file income tax return without Form 16
 How to rectify income tax returns
 Income-tax (21st Amendment) Rules, 2017
 Deadline for filing income tax return nears; here are 10 common mistakes that you must avoid
 All you need to know about form 26AS
 How to file income tax return?
 7 changes that affect income tax return filing this year
 How To File Income Tax Return (ITR) Online For FY2016-17? Last Date July 31
 Last date for filing income tax return approaches: What is Form 26AS? How it can help you claim refunds

Interest on bank deposits likely to be tax exempt
February, 17th 2007

To boost deposit growth, finance minister P Chidambaram may offer deduction on interest earned from bank deposits up to Rs 15,000. FM is likely to restore the provision under 80L of the I-T Act that allows deduction for interest on bank deposits up to Rs 12,000.

With retail investors channelling their savings to the capital markets and mutual funds, the growth rate in bank deposits has slackened. Given that deposit this fiscal grew just 22%, even on the back of a credit offtake of 31%, the finance ministry is considering these tax sops on deposits.

To help banks mobilise deposits, the government may also consider, increasing the TDS ceiling on fixed deposits to Rs 10,000 from Rs 5,000.

Interest on bank deposits used to be allowed as a deduction, subject to a ceiling of Rs 12,000 per annum under section 80L of the I-T Act. The exemption was withdrawn in the Finance Act, 2005. The Indian Banks Association has recommended restoration of that exemption and at a higher ceiling of Rs 15,000. Reintroduction of 80L can be considered to make bank deposits attractive, a government source said.

We want banks to build on low-cost deposits. One way to encourage this would be to consider exempting the interest income from these deposits from the purview of I-T. This will make savings bank deposits an attractive option for the public, the source said.

Savings bank deposits constitute a major portion of bank deposits in rural areas. As per RBI directive, such deposits earn 3.5% interest which is subject to I-T. With current inflation level over 6%, the real return from these deposits is negative. Further, small amounts of interest accruing on savings account deposits are difficult to keep track of for a host of individual taxpayers. Exempting interest income on small deposits would remove this too.

The government is planning to bring down the lock-in for tax breaks on fixed deposits to three years from the current five years. The Centre is also considering raising the ceiling for tax deduction at source (TDS) on interest income from fixed deposits in public sector banks to Rs 10,000. Under current guidelines, banks have to deduct TDS on the interest paid to depositors if it is more than Rs 5,000 in a given financial year.

While the revenue department may not favour restoring tax exemptions, the government has to balance such norms of propriety with the economys growth requirements.

To give consolidation in the banking sector a leg up, the industry has sought tax incentives on M&As to be extended to cover voluntary takeovers by private banks, foreign banks and even urban cooperative banks to create a level-playing field.

The tax break will enable a private sector bank, which acquires an ailing bank, to set off carry forward losses of target bank against its own profits. The tax break is available to a state-owned bank that takes over a loss-making public sector bank or a private bank.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions