Budget 2020 – Optional Tax Regime and Side Effects.
Its argued that with an option to choose Tax model as per Budget 2020, Individuals may have lower incentives to save which can impact long term savings in India. It augurs well for the Govt, considering we are in relative slowdown times and look to boost consumption.
As against the Wishlist of a few for a New TAX Savings bond, the new option does not incentivize the bonds and all the more, assesses’ are induced towards reduced taxes for no deduction overall.
Much discussed but perhaps not so acknowledged issue of low demand metrics seems to be addressed by the new tax method as it enables citizens to choose rather than forced save for taxes.
Changing Habits:-
Saving habits are already changing with lifestyle changes and digital ways of living.
As per a recent study, there is a marked reduction in Indian savings from erstwhile 36% in 2012 to just about 30% currently.
However, the big question among all is that, whether the tax incidence on lower and lower middle class reduces overall in absolute terms? During these times of slowdown where Govt is constantly looking for more revenue sources, perhaps the idea is to move towards deductions free regime with simplified tax model which can engulf more Indians in the tax net with a specific eye on the largely let off businesses so far & the unorganized sector.
Latest Updates
- Resident’s Guide to Buying NRI Property in IndiaResident’s Guide to Buying NRI Property in India India sees a high volume of property transactions involving Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). While such deals are legally permitted, they come with added compliance requirements—especially for resident Indians purchasing property from non-residents. Even minor procedural lapses can trigger […]
- Flipkart ESOP Compensation: ₹11 Crore Payout – Salary or Capital Receipt?Flipkart ESOP Compensation: ₹11 Crore Payout – Salary or Capital Receipt? In a landmark situation that could set a precedent for global tech employees, Flipkart employees received massive discretionary payouts after their ESOPs lost value due to a corporate restructure. But the key question remains—should such payouts be taxed as salary […]
- Form 16: Key to Accurate ITR FilingForm 16: Key to Accurate ITR Filing As tax season rolls in, salaried individuals across India are bracing themselves for the annual ritual of Income Tax Return (ITR) filing. With numerous documents to gather and deadlines looming, one document emerges as a true ally—Form 16. Often overlooked or misunderstood, Form 16 […]
- Cost Inflation Index for FY 2025-26: Impact on LTCG TaxCost Inflation Index for FY 2025-26: Impact on LTCG Tax On July 1, 2025, the Income Tax Department officially announced the Cost Inflation Index (CII) for the financial year 2025-26, setting it at 376. This annual update holds crucial significance for taxpayers, especially those dealing with long-term capital assets, as it […]
- Loan Interest Deductions: How to Claim and Avoid Tax ScrutinyLoan Interest Deductions: How to Claim and Avoid Tax Scrutiny Loan interest deductions are a powerful tool in reducing your taxable income and optimizing your financial planning. Whether you’re repaying a home loan or funding higher education, the Income Tax Act offers key deductions that can help you save significantly. However, […]