InvestorQ : Why are there concerns that the new tax regime could reduce the savings of Indians?
manisha Kolvenkar made post

Why are there concerns that the new tax regime could reduce the savings of Indians?

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Mahima Roy answered.
1 year ago
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In a way that assumption is correct. Most people in India only save through the tax saving tools like Section 80C. Small amounts saved in provident fund, LIC endowments and ELSS can grow to big amounts over a longer period of time. However, the new tax regime offers lower tax rates but without the exemptions. That means, people have a choice to not save and just spend the money and still pay lower taxes. Clearly, the government’s effort in this case is to give a boost to consumption and that is something which will be successful. However, this boost to consumption will come at the cost of savings and that is not a good sign. All the more because in the last six years the average rate of savings of Indian households has been consistently falling and that puts a lot of middle and lower middle class families in a very vulnerable position.

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