INSUBCONTINENT EXCLUSIVE:
State Bank of India has said that depositors are getting negative returnsRetail depositors are earning negative returns on their bank
deposits and hence, there is a need for reviewing taxes on interest earned, State Bank of India (SBI) economists have said.If not for all
the depositors, the taxation review should be carried out for at least the deposits made by senior citizens who depend on the interest for
their daily needs, the economists led by Soumya Kanti Ghosh said in a note, which pegged the overall retail deposits in the system at Rs 102
lakh crore.At present, banks deduct tax at source at the time of crediting interest income of over Rs 40,000 for all the depositors, while
for senior citizens the taxes set-in if the income exceeds Rs 50,000 per year
As the policy focus has shifted to growth, the interest rates are going down in the system which pinches a depositor."Clearly, real rate of
return on bank deposits has been negative for a sizeable period of time and with RBI making it abundantly clear that supporting growth is
the primary goal, the low banking rate of interest is unlikely to make a north bound movement anytime soon as liquidity continues to be
plentiful," the note said.The current bull run in financial markets is possibly a break from the past as households may have got into the
bandwagon of self-fulfilling prophecy of a decent return on their investment, it added further."We thus believe, it is now the opportune
time to revisit the taxation of interest on bank deposits, or at least increasing the threshold of exemption for senior citizens," the note
