All that glitters is not gold. Similarly, all that is said to have been simplified might as well not be so simple.
Budget 2020 is a classic example of my above opinion. Though there are many pointers in the budget which really need rethinking, let me pick up two points which I feel will put the middle-class in a dilemma of whether to invest or not going forward. Moreover, the habbit of equity investment which was off late picking up in traditional Indian middle-class mindset will also to an extent get impacted , thanks to Budget 2020.
Budget 2020 has introduced an all together new tax structure with an option to the individual tax payers to choose from the new tax regime proposed or the existing tax rates. The new tax scheme although which appears to be very glittery, has also some terms and conditions in asterisks.
The new tax scheme has brought into existence new income slabs and associated tax rates which are as follows -
Income upto5 Lacs, No change , remains same for both the schemes.
Income from 5 Lacs to 7.5 L, the tax rate is 10 %.
Income from above 7.5 L to 10 L, the tax rate is 15%.
Income from above 10 L to 12.5 L, the tax rate is 20%.
Income from above12.5 L to 15 L, the tax rate is 25%.
Income from above 15 L ,the tax rate is 30%.
Surcharge and cess as may be applicable.
Appears glittery, isn't it? But as I said, it is not gold, so be thoughtful while opting for the new scheme as the terms with which it comes are not very favourable for the investor in any one of us.
The new scheme comes with a condition that person opting for the new scheme will have to forego the following deductions -
1. Chapter VI A deductions which include Sec 80 C, 80 D , 80 E and 80 G.
2. LTC, HRA, PT paid , Std. Deduction of 40,000 from salary, Entertainment Allowance, Allowance for income of a minor, Interest on housing loan,Family Pension deduction , food coupon allowance to be precise.
Investment habbit is hard to cultivate and seeing the above tax scheme, there seems to be