Economists say the central government’s new tax system on income tax will affect the savings of Indian families.
The central government has released the budget on July 1 for the fiscal year 2020-21. It introduced a new tax system with income tax. Accordingly, many tax incentives provided in the current tax system have been abolished as the tax rate is significantly reduced.
Elimination of tax credits
Those who opt for this new tariff exemption will not be entitled to income tax benefits like LIC, home rent, home loan interest. People were told that they could either adopt the new tax system or the old tax system as needed. It is expected that 80% of the people will choose the new tax system. Experts say the new tax system will severely affect people’s savings.
According to Bana Murthy, a professor at the National Institute of Public Accounting and Policy, India’s economy is currently in recession. The main cause of the current crisis is lack of demand. The central government has reduced the corporate tax to restore the economy.
Income tax has also been changed. It can increase people’s purchasing power and increase demand. But he said that people’s savings would be the most affected.