Source | www.moneycontrol.com | Preeti Kulkarni
Be careful what you wish for, it is said, for it might just come true! This is exactly what has happened to Indian taxpayers. For long, they have demanded a simplified tax regime with liberal slabs and lower rates. In Union Budget 2020, Finance Minister Nirmala Sitharaman has acceded to the demand, but with a caveat: to take the ‘simplified’ tax structure, you will have to let go of a host of exemptions and deductions offered so far.
The current income-tax regime and the new one will exist simultaneously, with the option of choosing between the two. You, the taxpayer, will now have to decide which one works for you. Ironically, the ‘simpler’ tax regime comes with embedded complications, triggering confusion rather than a sense of relief. Here is a five-point guide to making the right choice.
There is no single answer to the ‘switch or stick’ question. And, it doesn’t just depend on your income or salary structure. You also need to look at your investment habits, your age, life-stage, goals, responsibilities and likely expenses. You will have to plot your actual income and deduction figures to decide whether to switch or not.