Individuals could soon lose tax benefits available on fixed deposits with an over five-year term once the direct taxes code comes into force from April 2011.
SBI has twice hiked interest rates on fixed deposits within a month, but an investor still gets better returns at the post office.
The popular Five-Year National Savings Certificates will earn an interest rate of 8.1 per cent from April 1 as against 8.5 per cent, at present.
The implementation of MCLR from April 1 has already led to a rate cut of 10 basis points on home loans by the country's largest bank, State Bank of India, and others.
The next revision will make the rates similar to those of bank FDs.
In a move that will hit the common man, the government on Friday slashed interest rates payable on small savings including PPF and Kisan Vikas Patra (KVP) in a bid to align them closer to market rates.
When the Centre collects money through cess, it can retain the entire fund for the particular scheme.
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