Last Updated on February 4, 2020 at 11:22 am
Two polls were conducted to find out support for the new tax regime introduced in budget 2020. Here is how 1182 Facebook users and 2034 Twitter users responded. We also discuss if the govt missed a trick in introducing the new regime.
The new tax regime introduced in budget 2020 removes all deductions that a tax-payer can buy/save/invest to reduce taxable income. See: New tax regime (section 115BAC): you cannot avail these deductions! Certain deductions are however retained. See: List of tax deductions in New tax regime (section 115BAC)
Have you checked if you should switch to the new slabs? Use this New Tax Regime vs Old Tax Regime Comparison Table to find out. Also see: If I choose the new tax regime can I switch back to the old regime?
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Explore the rest of our budget 2020 coverage: (1) Individuals to pay Tax on Dividends from Shares and Mutual Funds! (2) Is the interest earned from PPF, EPF, SSY Taxable in new tax regime? (3) Will TDS apply to mutual fund capital gains from April 2020? (4) Do Middle East NRIs need to pay tax in India from April 2020?
Twitter poll: “Will you choose the new tax regime or stick to the old one?” As you can see from the featured image above, 83% have polled in favour of the old regime. The poll is still open. You can vote here
Facebook poll: This was conducted in the Facebook group, Asan Ideas for Wealth. Since it is a closed group, a screenshot cannot be provided. A good 940 members voted in favour of the old tax slab and 127 in favour of the new slab.
Why do netizens prefer the old slab? If you use the comparison spreadsheet linked above, it should be fairly clear that higher the deductions that you are currently eligible for and using, lower will be your taxable income. Thus even if you are in the 30% slab, the tax outgo would be lower in the old regime.
While it is debatable if these polls are representative or not, it should be fairly clear that there is not enough incentive to move to the new regime, simpler as it may be.
Did the govt miss the trick? In my opinion, yes. They could have made the new tax regime compulsory for young earners, say for those who will turn 18 after 1st April 2020. This will be a gradual but significant shift to the new regime. Perhaps they wanted to avoid protests that occurred when EPF was made taxable.
Since it is early in the government’s tenure, one can expect the new tax regime to become gradually more attractive and deductions eased out in the old.
What is your stance? Will you shift to the new slabs even if it means paying more tax? Or will you continue with the old as long as it is available (this is my stance)?