Why this step-motherly treatment to the followers of the Old tax Regime?
It is not understood as to why the Government is in favour of a ‘Spending Economy’ by discouraging SAVINGS which is considered to be a backbone of Indian Economy. In fact in the past the Government promoted savings by encouraging people to invest in the specified savings scheme including the payment of Life Insurance Premium and giving deductions for repayment of housing loans and in allowing deduction up to Rs. 2 lakhs for the loss under house property due to interest on Housing Loans. Many assessees have entered into long term commitment by purchasing Life Insurance Policies and have constructed houses by getting housing loans from the Banks and Housing Finance Companies on the belief that they will be able to save income tax under section 80C for the repayment of housing loan and premium for life insurance policies and for the interest on housing loans up to Rs. 2 Lakhs under the head ‘Income from House Property’. Now all of a sudden, these benefits were withdrawn putting the assessees in trouble who have purchased Life Insurance Policies and availed Housing Loans (which are long term commitment in the form of yearly payment of premium and repayment of housing loan with interest) mainly for the purpose of saving Income Tax believing that the Government will continue to give concessions to promote savings.
Adding injury to the wound, now the non-taxable limit is kept very low for OTR and the rebate under section 87A is curtailed. In addition they cannot opt for Old tax Regime, if they file belated return.
Above all they are denied Marginal Relief if their income is marginally above Rs. 5 Lakhs, which is totally unfair. Section 87A rebate is available up to the taxable income of Rs. 5 Lakhs and they need not pay any tax if their income is Rs. 5 Lakhs. But if the income exceeds Rs. 5 Lakhs the rebate is not available they have to pay the tax from Rs. 2.5 lakhs onwards. For example, if the taxable income is Rs. 5,01,000/- the tax payable including education cess will be Rs. 13,208/-, which is totally unfair; for an additional income of Rs. 1,000 the tax payable is Rs. 13,208/-. Marginal Relief should be given to the extent that the tax payable should be restricted to the income that exceeds rs. 5 Lakhs.
It is advocated by the Government that 75% of the assessees have moved to the New Tax Regime, which is not out of love and affection but out of compulsion. Hence the finance minister is requested not to betray the followers of the Old Tax Regime in the name of promoting the New tax Regime.
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You are very right. Salaried employees must have done long term planning to save tax vide different modes of investments. Now the very purpose of such long term investments like lic premium, PPF, investment in house property with bank loan etc. I fail to understand, why Government wants people to lower savings and increase consumption? In long term the employees who opt for new regime may have lower savings and on retirement lower accumulated savings.
Yes, totally agree with this point of to increase popularity of New Regime, it should be at the cost of Old Regime. In other words if any one person is filing under Old Regime he must be taken care of the same. And any person shifts from new to old regime he has been restricted to transfer from old to new (business income).
so please look in this matter. Awaiting reasonable solutions thanks.
Well said sir.
Since the Government is promoting the New Tax Regime by giving more incentives, the assessees who are filing ROI under the Old Tax Regime are slowly being wiped out. Because of this not only the savings are coming down the Charitable Trusts will suffer since the donations would stop due to denial of deduction under section 80G.