 "Dinesh Khara, SBI Chairman")
State Bank of India Chairman Dinesh Kumar Khara pitched on Wednesday for tax relief on the income earned from interest, adding that the move would help the banks boost their savings, which can be used to fund projects.
"If at all some relief could be given in the Budget regarding tax on the interest earnings, it will be an incentive to depositors. Eventually, the banking sector uses deposits mobilised for the capital formation in India," he told PTI in an interview.
Under the current taxation laws, banks deduct tax on interest income earned on deposits (in all the bank branches) when it exceeds Rs 40,000 a year. For a savings account, interest earned up to Rs 10,000 is exempt from tax.
Khara's remark came as the finance ministry is holding talks with various stakeholders ahead of the presentation of the Union Budget 2024-25. According to sources, the Budget will be presented by Finance Minister Nirmala Sitharaman in the Parliament in the second half of July.
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Last month, the SBI increased the fixed deposit rate on select short-term maturity up to 75 basis points, which was done as "there's room for improvement," Khara noted.
The SBI expects its deposit growth rate to improve to certain extent in the ongoing financial year. Last year, they grew by 11 per cent, he said, adding that the bank would make an effort to reach the target of 12-13 per cent this year.
Experts said that the general Budget of FY25 is expected to continue the push on capital expenditure, stressing that the focus should be on rural infrastructure.
Industry bodies have also recommended tax relief on personal income to push consumption demand amid the persistent high levels of inflation.
