Banks’ plan to increase TDS threshold nixed

The finance ministry has rejected a proposal from banks to enhance the threshold for mandatory tax deduction at source (TDS) on interest earned by depositors. It has also shot down a suggestion to make term deposits of three years tax-exempt. Bankers had demanded that they should be required to cut tax only when interest income of a customer exceeded R50,000 in a year, up from R10,000 at present. A senior finance ministry official said the government is unlikely to raise this limit in the Budget. “Our internal calculations show that only a tiny percentage of tax payers takes into account the interest income. Raising the TDS threshold would mean a large number of tax payers going outside the tax net," he said.

Source: Financial Express