Lack of Tax-Saving Options in New Tax regime

There is a  gradual shift towards the new income tax system. The new regime is expected to become mandatory in the near future, especially with the FM promising a complete redo of the Income Tax Act. The new system seems simpler with no exemptions and lower tax.

However, the lack of tax-saving options is a concern. It may result in reduced savings and more financial problems for many people later in life.

Without investment tax incentives, many people – especially younger, lower-income ones – may not save. Our consumer-driven society promotes spending over saving. Only the savings tax rebate counterbalances this trend. Its effects go beyond tax-saving investments.

These savings frequently inspire wider savings. This is common among young people. They start with tax-saving investments and get significant returns due to look-ins. This initial experience inspires lifelong savings and financial security for many.

We should hope the new tax code would still encourage saving despite its simplicity.