FM Pushes For New Tax Regime: Is It Good For You?

It was in Budget 2020 that Union Minister of Finance Nirmala Sitharaman first introduced the new tax regime, which offered lower tax rates than the old tax regime. The catch, however, was that the new tax regime did not allow any tax deduction or exemption benefits. Over the years, as tax rates remained more or less the same, few from the middle class took to this new simplified tax regime, as tax saving was higher in the old tax regime—though there is no government data on the subscriber base, anecdotal evidence suggests so. For a large number of people, mandatory investments and expenses such as the Employees’ Provident Fund (EPF) and home loan principal and interest payment takes care of the deduction limits under the old tax regime. In other words, this segment did not have to make any extra effort to save more. The lack of changes in tax rates in the last Budget had...