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
- A Beginner’s Guide to E-Filing Income Tax Return for FY 2024-25A Beginner’s Guide to E-Filing Income Tax Return for FY 2024-25 Filing your Income Tax Return (ITR) is not just about fulfilling a legal formality—it’s a vital part of your financial discipline. Every individual earning income in India is required to declare their income, deductions, and taxes paid during the financial […]
- Faking Tax Deductions? You Could Be Penalised Up To 200% Under Income Tax RulesFaking Tax Deductions? You Could Be Penalised Up To 200% Under Income Tax Rules New ITR-1 and ITR-4 Mandate Detailed Proof for Claims to Curb False Deductions Paying taxes accurately and on time isn’t just a legal obligation—it fuels public welfare and national development. To ensure compliance, the Income Tax Act prescribes […]
- Aadhaar OTP a Must for PAN Registration: New Income Tax Portal RuleNew PAN Registration Rule: Aadhaar OTP Verification Made Mandatory In a significant update, the Income Tax Department has introduced a mandatory Aadhaar-based OTP verification step for individuals registering their Permanent Account Number (PAN) on the official e-filing portal — www.incometax.gov.in. This change is designed to enhance security and ensure that only genuine users […]
- Income Tax Benefits for Senior Citizens: What You Can Claim in AY 2025-26Income Tax Benefits for Senior Citizens: What You Can Claim in AY 2025-26 As the Income Tax Return (ITR) filing season for Assessment Year 2025-26 begins, many taxpayers—especially senior citizens—are evaluating the deductions and exemptions they are entitled to. The Income Tax Act provides several tax concessions for senior and super senior citizens […]
- Claiming Input Tax Credit (ITC) under GST: Essential Documents and Compliance ChecklistClaiming Input Tax Credit (ITC) under GST: Essential Documents and Compliance Checklist Input Tax Credit (ITC) is a cornerstone of India’s Goods and Services Tax (GST) regime. It enables registered businesses to offset the tax paid on purchases and business-related expenses against their GST liability on outward supplies. However, ITC is […]