As we know the new tax regime offers concessional tax rates but does not offer deductions that are given in the old tax regime.
As of now, one can claim deduction upto ₹1.5 lakh for investments made under different sections. In 2020, government had introduced the new tax regime and in 2023, it became the default regime.
However, taxpayers can opt for the old regime if they believe that this will lead to lower tax outgo.
When the old tax regime is phased out, taxpayers will have little or no incentive to make investment in small invesment schemes such as PPF, NSC and SSY, among others.
Nirmala Sitharaman had announced during last budget on July 23, 2024 that it will introduce a new income tax law. The review, she had said, would take six months. During the Budget speech, she mentioned that the new income tax law will be clear and concise. It will also reduce the litigation in courts between taxpayers and the income tax department.
