Budget wish list: Lower tax on FD interest & fund for NBFCs

Ahead of the Budget for 2025-26, representatives of the financial sector and capital markets on Thursday sought a lowering of tax on interest income from fixed deposits to align with capital gains tax on equities, a dedicated refinancing window for non-banking financial companies (NBFCs), and incentives for long-term savings.

To support deposit mobilisation by banks amid the flight of funds from banks to the capital market, banks suggested finance minister Nirmala Sitharaman to treat income from fixed deposits at par with capital gains tax on equities. Currently, FD income is taxed as per the applicable income tax slab rates, with the marginal rate being 30% excluding cess and surcharge, sources said. However, short-term capital gains tax rate for listed equity shares held for less than 12 months stands at 20% while the long-term rate is 12.5% for holding above 12 months.