If you are an Indian you might know the Indian Budget by heart now, as it was the most talked about topic in the last 2-3 weeks. If you are not from India, Indian Government has introduced a budget where they have made the new tax regime the default scheme and it has a significant tax cut on income up to Rs 7 lakh. That means someone earning Rs 7 lakhs does not have to pay any tax.
PC: Pixabay.com
The problem with the Old Regime was that when we have to reduce the tax we had to invest in some options like LIC, FD with 5 years or ELSS funds. The returns on these options were less but people used to invest in these just to save the taxes. Now with the new tax regime, you do not have to save for the tax and thus people can start focusing on creating wealth.
Why I am saying creating wealth because now the same amount of money which was used for saving tax can be used for creating wealth as you have more options to invest now and thus plan for your future. This is a great opportunity for the young generation who have started earning because, for them, it is the time to take the risk and build wealth over time.
The problem with people who are in the working environment for more than 5-6 years, might have invested in the tax saving instruments and thus cannot back off now. So for them staying in the old-tax regime is ok for now until there is only one tax regime for everyone. In my case, I have some LIC policies running and thus need to keep continuing it till maturity otherwise I will lose a lot of money. So yeah for us, there might not be any good news from the Budget but I am happy for the young generation where they can plan for their future financial goals from Day 1.
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