In the budget of 2025, the announcement of zero tax on income up to 12 lakhs looted all the members. But this exemption is only for those who choose the new tax regime. Far from giving relief to the Old Tax Reseam, the Finance Minister did not even mention.
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Will the old tax regime that promotes savings and investment end, why the government wants people to spend more and what will be its impact; Will know in today’s Excellener…
Question-1: Will the Old Tax Resetam be abolished? answer: There are two types of tax system in India…
First- Old Tax Resetim already underway. In which savings and investment are promoted by giving all exemption like HRA, LTA, 80C and 80D.
Second- The New Tax Resetim, which was launched by the government in 2020. Tax rates were reduced by not exempting it, which saved more money in people’s hands.
According to tax expert Balwant Jain, Old Tax Regim has been truly injected in the budget of 2025. He will slowly die his death. New tax people will no longer be taxed on the earnings of up to 12 lakhs. Employed people will also get additional standard deduction of 75 thousand rupees. That is, income tax free of up to Rs 12.75 lakh. Those who have chosen Old Tax Reseam are no use.
After this announcement, there is no attraction left to remain in the old tax regime. According to Senior Business Journalist Shishir Sinha, the upcoming New Income Tax bill can be given the deadline for abolition of old tax. The intention of the government is clear that the tax system will be the same, that too new tax is a regime.
Finance Minister Nirmala Sitharaman said in a press conference organized after presenting the budget,
75% taxpayers across the country have already left the old tax system and have come under the new tax system. We hope that all taxpayers will gradually do this.
Question-2: Why does the government want to end the old tax regime? answer: Experts believe that due to these 4 major reasons, the government wants to end the old tax regime …
1. Easy to Easy Tax Structure: Old Tax Regyve is a very complex. It used to benefit from many discounts and cuts like 80C, 80D and HRA. This is very difficult and cumbersome to pay tax for taxpayers. The government also faces difficulties in working with this regime.
2. Stop tax evasion: The government believes that tax evasion or manipulation can be prevented by low discounts and low cuts. To avoid tax, people fake and use false documents.
3. To fill tax from more people: The new tax regime has low rules and regulations. More people will pay tax due to easy facilities in the new regime, which will increase revenue.
4. Management of new Regiment cheaper: More officials are required to monitor many discounts and cuttings in the old tax regime. Manpower can be reduced by the new regime.
Question-3: What are the provisions that promote savings and investment in Old Tax Reseam?
Answer: The old system is going to promote investment and savings. Some major provisions …
- You can save up to 1.5 lakh tax under section 80C. EPF, PPF, Equity Linked Savings Scheme, Sukanya Samriddhi Yojana, National Savings Certificate, five -year fixed deposits, senior citizens invest in saving scheme, you can get tax exemption.
- If there is a home loan, you can take tax exemption on the interest paid on it. Under Section 24B of Income Tax, there is a provision of tax exemption at an interest of 2 lakh in a financial year.
- Under Section 80D of Income Tax, you can save tax of up to 25 thousand rupees by taking medical policy. This health insurance should have the name of wife and children themselves.
- If parents come under the purview of senior citizens, then additional discounts of up to Rs 50,000 can be taken by purchasing a medical policy in their name.
- You can get an additional 50 thousand rupees under Section 80 CCD (1B) of Income Tax by investing up to Rs 50,000 annually in National Pension System i.e. NPS.
Question-4: What will be the impact with the end of the Old Tax Resetam? answer: The end of the Old Tax Resetam may lead to 3 big impact …
1. Expenditure will increase instead of savings and investment Tax expert CA Balwant Jain says that now about 98% taxpayers will choose the new tax regime and the government wants the same. Due to this, people will spend more instead of investing. This will promote GDP and production. Also, the government’s GST collection will increase.
But it will also have a negative effect. In fact, people used to invest like PF, NPS, mutual funds for exemption in old tax regime, which used to work after their retirement. But today’s working generation, who chooses New Tax Regim, trusts more. In such a situation, their retirement plan will not be prepared. That is, their future can be in danger.
2. Middle class pocket affects There was a lot of investment option to get income tax exemption under the old regime. Who used to help people save tax. Taxpayers used to save taxpayers to a great extent from options like PPF, ELSS and NSC. Now this exemption will not be available under the new regime. This will affect the savings of the common man.
3. Social work will decrease Charitable donation will be reduced with low discounts, that is, the money given for Dakshina or social work will now be closed. The money donated in the old tax regime was not taxed. This will not provide money for NGO and social working. However, if people want to donate after the new regime, then it will come under tax.
Question-5: Why do people want people to spend more money? answer: According to senior business journalist Shishir Sinha, in the budget of 2025, the government has promoted development through consumption lead growth. For this, you have to understand a small economical principle, which is called Virtuous Cycle i.e. Suchakra. Its essence is that one good thing starts with another good thing.
Changes in income tax will bring additional money to people. Now if you spend a part of this money, then it will give companies a chance to increase production. If production increases, employment opportunities will be created. If employment opportunities are made, people will get money in their hands. If the money comes, the demand will increase. FMCG, Auto, Real Estate and other sectors will get boosts from this suchakra.
Finance Minister Nirmala Sitharaman during the budget in the House.
Question-6: Would any old tax be chosen to choose? answer: To understand this in easy language, one has to understand the difference between the two taxes. The income of up to 12 lakhs in New Tax Resetam is free, but the old regime has been kept as it is. In the Old Perform, investing in things like PPF, NSC, Life Insurance and NPS is given tax exemption.
According to the expert, if a person comes in a high salary category and gets the facility like HRA from the company, then the old tax regime is still better in some cases. According to Mumbai’s Chartered Accountant Chirag Chauhan, if your annual income is ₹ 40 lakh and HRA is up to ₹ 12 lakh, then the old system is still beneficial. However, the number of such people will be less than 1%.
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