Netizens say no to the new tax regime: prefer deductions

"Will you choose the new tax regime or stick to the old one?" Here is what 3216 Facebook and Twitter users voted. Also, did the govt miss a trick while introducing this new regime?

Twitter poll screenshot of Will you choose the new tax regime or stick to the old one

Published: February 4, 2020 at 11:22 am

Last Updated on

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?

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.

Join our 1200+ Facebook Group on Portfolio Management! Want to know how to reduce fear, doubt and uncertainty while investing for financial goals? Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community

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)?

Do share if you found this useful
Join our 1200+ Facebook Group on Portfolio Management! Want to know how to reduce fear, doubt and uncertainty while investing for financial goals? Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author

Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com

About freefincal & its content policy

Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News
Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)

Connect with us on social media

Our Publications


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingThis book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
   

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new

This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when traveling, how traveling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)  

Free Apps for your Android Phone

Comment Policy

Your thoughts are the driving force behind our work. We welcome criticism and differing opinions.Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

6 Comments

  1. I think govt. did the right thing in rationalising the income tax.
    Indians are obsessed with tax saving and not with real investment. People keep buying unwanted policies only to save tax.
    Knowing about “personal finance” and knowing the difference between saving and investing is very important.
    The new tax regime is a step forward where people can move away from the old thinking of mixing investment and tax saving.

    Anyway those who have more deductions like home loan can stick to old regime for now.

  2. Sir , other sites, money control have provided auto caculations of tax, with diff in raxes by feeding in parameters of your incomes and ded. Please prepare such a tool

  3. At the outset, I congratulate you & your contributors for more useful analysis than put out by other experts, of the latest brainwave.

    Both the option of choosing between 2 regimes & graded approach suggested by you, are symptomatic of lack of conviction/intention to actually simplify. How does increase in tax slabs, leaving out certain deductions & retaining other ones, square up with the objectives of the exercise & still not able to push people to opt for new thought – except for the ones who won’t care to analyse.

    The approach basically is to introduce a variation to solve one problem & revert back to the some version of the original problem after 2-3 years. The experts keep on analyzing & nobody has moved an inch – refer DDT, tax rates, tax slabs etc.

    Don’t expect great things to happen on their own if one does not value time, discipline & will to clear bottlenecks. $5 trillion will happen. When & will it then be sufficient for the bottom 30% of population, are the questions to ponder over.

  4. will the Finance Minister Change Her Adament Attitude ,
    And Do Something As Per People’s Wish ; Will ShePe
    Care To Listen Poor Common People’s Voices And Concern ;

    For Her , There Are No Senior Citizens Of 60 Years And
    Above , And Also There Are No Super / Very Senior
    Citizens Of 80 Years And Above , Alive / Living In Our
    Mahan Bharat Desh .

    All Helpless ???

  5. Old tax regime encourages savings while the new tax regime is aimed at more cash in hand for tax payers. This may be the Government’s way to encourage spending. In my opinion especially for young tax payers, its better to stick to the old regime to inculcate / encourage the habit of saving for the future. Granted there are saving instruments which offer better returns over the long run and a disciplined young investor with more cash in hand is better equipped to utilize those instruments, but then how often are young salaried individuals disciplined 😊

  6. You know, the people who can’t take advantage of deductions(many reasons) can benefit from new tax regime. Looks like 83.4% people are taking advantage, that is very good number. Govt only satisfied 16.6% tax payers.

    Thanks for the post.

Leave a Reply

Your email address will not be published. Required fields are marked *