Introduction: In the wake of the New Tax Regime’s introduction two years ago, the landscape of investment for tax savings has undergone a significant shift. Gone are the days when investments could be made with the sole aim of reducing taxable income through deductions. With the new regime allowing only a standard deduction and employer contributions to NPS, it’s time for investors to re-evaluate their investment strategies. This article delves into the crucial shift from investing merely to save on taxes to making informed decisions that align with one’s financial goals and contribute to wealth creation.
It has now been two years since the introduction of the New Tax Regime. As per the new regime of taxation one can’t get any deduction w.r.t. their investments. Eligible deductions under new regime are:-
- Standard deduction of Rs.50,000/-
- Employer contribution to NPS u/s 80CCD(2) of the Income Tax Act, 1961
The advantage of this new regime is, many of the investors who invested earlier only with the view to save tax are now re-considering of their investment decisions made earlier. What I want to convey from this article is, now is the right time to think over your investment decisions which were taken in the past only with the view point to save tax.
Points for discussion:-
- Whether Investment product fit into our financial goals or not
In the past many of us bought insurance and tax saving schemes without considering whether the product will fit into our financial goals or not. So, it would not create any type of wealth and then we just blame the agent that what we expected doesn’t happen.
- Investment products which has lock in periods
When we invest without considering the implications of such a type of investment, we face a number of issues. And the major issue was that of liquidity. Liquidity time of our investment funds is also a major point that needs to be taken care of.
- Invest to create wealth is what we should always keep in our mind
If you lack financial knowledge then take the help of a professional to build your wealth. It is like going to a Doctor i.e. your Financial Doctor who takes care of your financial well-being. Now onwards take a review of your own assets and make the decision which contributes to building your wealth!
Conclusion: As we navigate through New Tax Regime, it’s clear that our approach to investing needs a pivotal change. No longer should tax savings be the primary motivator behind our investment decisions. Instead, understanding the fit of investment products with our financial goals, considering the liquidity of our investments, and seeking professional guidance when necessary, become paramount. This transition from a tax-saving mindset to a wealth-creation focus is not just advisable but essential for achieving long-term financial success. Let this change in perspective guide you towards making investment choices that contribute genuinely to building your wealth. Remember, the goal is to invest wisely, with a clear vision of your financial future, rather than merely looking for short-term tax advantages.
Hope this small write-up serves you and motivates you to invest to create wealth and not to save tax!
You can reach to me at rohanrp1983@gmail.com
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