New Delhi, Jan 2 (PTI) The financial sector, especially banks on Thursday made a case for tax sops in the upcoming Budget for fixed deposits to support savings which have seen reduction in recent past.

Suggestions regarding improving efficiency of capital markets and increasing capital market inclusion were also made during the pre-Budget meeting with Finance Minister, Edelweiss Mutual Fund MD & CEO Radhika Gupta told reporters here.

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Recommendation regarding incentivisation towards long-term saving, both debt and equity, were also made, she said.

Finance Minister Nirmala Sitharaman on Thursday chaired the seventh pre-Budget consultation with stakeholders from the financial sector and capital markets.

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The meeting was also attended by Finance Secretary and Secretary DIPAM; and Secretaries of Department of Economic Affairs and Financial Services, and Chief Economic Adviser.

The full Budget 2025-26 is scheduled to be presented in Parliament on February 1.

The NBFC sector pitched for a refinance window for green finance and electric vehicles, FIDC director Raman Aggarwal said.

"There is a very strong case for a direct refinance window provided to NBFCs. A specific fund, meant for MSMEs, for small borrowers, and for environment-friendly assets like electric vehicles, can be provided to organizations like SIDBI and NABARD for refinancing, just like national housing banks, which refinance housing finance companies," he said.

With regard to recovery, he said, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act needs some tweaking so that NBFCs can benefit from this.

Currently, he said, the limit under SARFAESI Act is Rs 20 lakh which can be reduced so that smaller NBFC players can be covered under this.

He also said that the government can consider removing TDS on non-individual borrowers as there is no extra revenue generated from this provision.

According to sources, representatives from banks suggested aligning long- term capital gain tax with fixed deposits so that deposit mobilisation can be encouraged.

Income tax is levied on return generated out of term deposit which discourages people from putting their savings in fixed deposits.

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