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
- Simplified Taxation for Small Businesses: A Guide to Section 44ADSimplified Taxation for Small Businesses: A Guide to Section 44AD Tax compliance in India can be a daunting task, particularly for small businesses. Maintaining detailed financial records and going through complex tax computations can be time-consuming and costly. To simplify tax procedures and reduce the compliance burden, the Income Tax Act introduced the […]
- Budget 2025: No Tax on Income Up to ₹12 Lakhs – Key Updates & CalculationBudget 2025: No Tax on Income Up to ₹12 Lakhs – Key Updates & Calculation In the Union Budget 2025, the Finance Minister introduced a groundbreaking change in the tax structure, allowing individuals with an annual income of up to Rs. 12 lakh to pay no income tax. This is not […]
- Taxation of Cross-Border Transactions in India Under the Income Tax Act, 1961Taxation of Cross-Border Transactions in India Under the Income Tax Act, 1961 In today’s interconnected global economy, international transactions have become a fundamental aspect of business operations. Companies engage in cross-border trade, foreign collaborations, and overseas investments, necessitating a clear understanding of taxation laws. Navigating the complexities of Indian tax regulations is […]
- Major GST Amendments in the Finance Bill 2025Major GST Amendments in the Finance Bill 2025 The Finance Bill 2025 proposes 11 significant amendments to Goods and Services Tax (GST) provisions, aiming to rectify anomalies, introduce new compliance measures, and clarify legal ambiguities. These changes, effective from April 2025, impact input tax credit (ITC) distribution, tax compliance, and procedural aspects of GST. 1. […]
- Review of TDS/TCS Amendments in Budget 2025Review of TDS/TCS Amendments in Budget 2025 Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions are integral to the tax system, ensuring tax collection at the source of income. However, the complexity of multiple sections, varying threshold limits, and diverse tax rates often leads to compliance challenges for both […]