As the government starts to lay the groundwork for the 2026 Budget, one powerful voice in the Indian financial sector is pushing for a big change that could completely reshape how ordinary people choose to save money.

The Chairman of the State Bank of India (SBI), Dinesh Khara, recently made a strong case for creating “tax parity” between bank deposits—like your fixed deposits (FDs)—and investments made in the stock market.

What does “tax parity” actually mean?

It’s all about making the playing field equal. Right now, there’s a difference in how these two common types of savings are taxed. Equity investments (like mutual funds and direct stocks) get favorable tax treatment, specifically through Long-Term Capital Gains (LTCG) tax breaks, which makes them very attractive.

Meanwhile, interest earned on traditional bank deposits, such as FDs, is often fully taxable according to your individual income tax slab.

Khara’s argument is that this current system, which gives preferential tax treatment to stocks, discourages millions of Indians who prefer the safety and simplicity of traditional bank fixed deposits. Bank FDs are still the savings backbone for huge sections of the population, especially in rural areas and among senior citizens. They value security and assured returns over the high volatility and risk associated with the stock market.

The SBI Chief believes that the next Union Budget should recognize the importance of these conservative savers and implement reforms that encourage saving in both types of instruments equally. His plea is essentially: “If you want the Indian household to save more, don’t penalize those who prefer a safer route.”

By making returns on bank FDs tax-exempt (up to certain limits or standards) similar to what’s offered on equities, the government could restore balance to the market and ensure that even the safest form of savings is rewarded properly.

Read More: The Budget Idea That Could Change How Millions of Indians Save Their Money