Banks suggest higher TDS limit for interest paid to senior citizens, pension funds

Representatives of banks and financial institutions attending pre=budget consultations by finance minister Arun Jaitley has suggested a hike in the TDS limit for bank interest, especially for senior citizens and pensioners, from the current Rs10,000, considering the present scenario.'

Bankers pointed out that the limit of Rs10,000 was last set in the year 1997.

They also suggested that a credit guarantee fund be set up to encourage investment in agriculture sector.

Small and marginal farmers have come together to form FPOs rather than cooperatives – should get the same benefits as those of companies. Besides, incentives should be given for investments to promote agriculture and infrastructure.

It was suggested that crop insurance benefits and interest subvention on agriculture credit be given through DBT to avoid misuse.

There should also be incentives for incremental jobs among others, it was pointed out.

It was also suggested that premium up to Rs1 lakh on life insurance policies be exempted from income tax.

Other suggestions included encouraging affordable housing and extending tax benefits to even rental properties; aligning of time limit of recognition of bad debts – RBI gives 180days and IT Act 90 days; and waiving of monthly reporting by banks to Income Tax Department –reporting be made annual.

It was suggested to incentivise digital transactions to make 2018 as a year of Paperless Access to Finance. It was also suggested that the date of Masala Bond TDS, which expires in June 2018, be extended.

In his opening remarks finance minister Arun Jaitley said the government will soon embark on a recapitalisation of public sector banks in order to strengthen their capacity to lend, as banks are the key pillars of the economy.

He said the government proposed to recapitalise PSBs in a front-loaded manner, which in turn would help in credit growth and job creation among others.

He said the government has decided to infuse capital worth Rs2,11.000 crore in PSBs in the next two years through budgetary provisions of Rs18,139 crore, and Rs1,35,000 crore through re-capitalisation bonds, and the balance through raising of capital by banks from the market.

The finance minister said that capital adequacy of the banks will help in credit growth and job creation among others.