NSC vs deposits
This is with reference to the timely article on the above subject in Business Line of March 22, which make it clear that NSC is, no doubt, preferred over the five-year banks’ tax-saving deposit by the middle-class and upper-middle-class tax-payers in view of its liquidity as well as tax benefit on the interest accrued portion every year.
It is a sorry state of affairs that banks, considered the backbone of the economy and whose deposits are used for the welfare of the downtrodden and upliftment of various sectors through concessionary lending, and neglected by the government in terms of making their tax-saving deposits at par with National Savings Certificates, particularly from the tax benefits angle.
The lock-in period of the tax saving deposits should be reduced from the existing five years to three years and depositors should be able to raise loans against deposits, as available for NSCs. The interest earned on the deposits should also be considered as further investment and the same may be extended under Section 80C. This will be more attractive to the large number of depositors who will deploy their funds for tax savings.
The Indian Banks Association and the people at the helm of affairs in the banks should take up the matter with the appropriate authorities to make the necessary changes, as suggested above, in the ensuing Finance Bill.
G. R. Nagarajan Madurai