In the longest Budget speech till date, lasting well over two-and-a-half-hours, Finance Minister Nirmala Sithraman on Saturday, 1 February, made several major announcements about a new tax regime and new tax slabs that are bound to have an effect on your personal finances and savings plan.
The Quint’s editorial director Sanjay Pugalia spoke to tax expert Gauri Chadha about the impact that the new announcements will have on an individual’s finances.
“Nirmala Sitharaman claimed in her speech that the tax rates were being simplified but according to me, they have been complicated. Now, people have been given a new tax rate, without any exemptions or deductions, on which your tax rate will be calculated. So now the tax payer has to calculate whether the previous tax regime would be more beneficial or the new one,” she said.
‘Wrong to Say Taxes Have Increased or Decreased’
Stating that it would be incorrect to conclude that any one section of the population would benefit from the new tax regime, Sanjay Pugalia said that the government’s figures were based on ‘theoretical exemption’.
Chadha said that once people decided to switch over to the new tax regime, it would be unclear, when if ever, you would be able to switch back to the existing tax system in the country.
“I do not know on what basis the government has specified that so many people will benefit as people are yet to declare which tax regime they want to go with and which would be more profitable to them,” she said.
Any Benefits for New Home Owners?
Answering a viewer’s question on whether new home owners would benefit from Budget 2020, in anyway, Chadha said that a new house owners would have to pay back the principal amount as well as interest on their home loan.
“Deductions for the repayment of both were available. If you want to switch to the new regime, you would not be eligible for these deductions any longer. You will need to calculate whether you end up paying more taxes with the deductions and exemptions or if you would be better off paying taxes while moving to the news tax slab regime,” she said.
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