This budget may bring the smiles in people who are looking to invest their money bank deposits and save the tax. Most likely this budget may amend the existing restrictions on tax saving fixed deposits. Nowadays most people prefer the mutual funds as the tax savings instrument because of their 3 years lock-in period. Tax saving fixed deposit has the 5 years as the lock-in and it reduces the banks to get more depositors. Indian Banks Association(IBA) has requested the finance minister to sweeten the tax saving term deposits to lure the investors. The sources said FM is accepted their proposal and we can expect the change in the budget. The union budget will be announced on Feb 26, 2010. The following are the expected changes in the budget but it may have changes.
- The lock-in period for the tax savings fixed deposit will be reduced to 3 years. At present it is 5 years.
- As of now you can show only Rs.100000 in tax savings fixed deposit. It is expected to be increased to Rs.200000 for the financial year 2010-11.
- If the interest earned on single branch exceeds Rs.10000, it is taxable and TDS is deducted by the banker. This limit will be increased to Rs.25000.
These are all only expected changes in the budget. Part of this may be applied or they may ignore it completely. We have to wait and watch till next week. I will write the follow up mail once the budget is announced. Get free email updates to know the budget news.
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