New Delhi:
Finance Minister Nirmala Sitharaman is going to present the Union Budget 2025 on 1 February 2025. Before this budget, there is a discussion whether the government can abolish the old tax regime. The new tax regime was implemented from 1 April 2020, and initially it was kept optional for taxpayers. However, from April 1, 2023, it has been made the default tax regime.
Many types of deductions and exemptions were available in the old tax regime, due to which people like it more. At the same time, tax rates are lower in the new tax regime, but the benefit of exemptions and deductions is very less.
Will the old tax regime end?
Will the old tax regime end in the future? There has been no indication from the government that the government will abolish the old tax regime. However, discussion is going on among taxpayers regarding its future.
Even though the new tax regime has become more popular due to its simplicity, many taxpayers still prefer the old tax system because of its deductions and exemptions, such as sections 80C and 80D.
- Under Section 80C of the Income Tax Act, there is a deduction of up to Rs 1.5 lakh on investments in life insurance premium, home loan and savings instruments like Public Provident Fund Provident Fund (PPF).
- Section 80D allows people to claim deduction on premiums paid on medical insurance policies for themselves and their family members. This helps taxpayers to reduce their taxable income.
Will Modi government abolish the old tax regime?
Tax and investment expert Balwant Jain gave the mint Said, “In view of the biased attitude of the government towards the new tax regime, the increasing number of people opting for it and the fact that after the introduction of the new tax regime, the limits of various deductions available under the old tax regime have not been increased. “Don’t be surprised if the Finance Minister completely abolishes the old tax regime.”
He further said that since the government wants you to report your actual income, which is the basis of the new tax regime, this is likely to happen sooner or later, even if the government does not make any formal announcement regarding abolishing the old tax system. No, but continued discussions on this indicate that it is not impossible. Especially in view of the increasing popularity of the new tax regime.
Who will suffer the most loss?
Tax experts believe that if the Finance Minister ends the old tax regime, home loan takers will suffer the most. Many people take home loan because it not only fulfills their dream of owning a house but also reduces their tax liability. If the old tax regime ends, they will stop getting tax benefits on home loans.
