Sir — Reportedly, interest rates on fixed deposits have been raised from the present 6.4 per cent to 6.65 per cent for a period of one to two years and from 6.6 per cent to 6.65 per cent for a period of two years to less than three years. There was a time when interest rates on fixed deposits stood at 12.5 per cent.
Drastic reduction in interest rate dampened the spirit of depositors to park their money in the banks. The present increase of 0.25 per cent and 0.05 per cent for one to two years and two to three years is just symbolic. The increased benefit coming from a hike in interest rate is not commensurate with rising inflation.
The present rise cannot be fully pocketed by the depositors as the Income Tax department will be waiting to grab a portion of it at the end of the financial year.
The Government should at least ensure that no tax is charged on the amount of interest accrued from deposit upto Rs 25 lakh. This will give some relief to those who solely depend upon interests to maintain their families.