PPF, EPF, Sukanya Samriddhi: All you need to know about tax savings schemes
Individuals and HUFs can opt for a new tax regime from FY 2020-21 by giving up about 70 deductions/exemptions
Last Updated at October 23, 2020 19:58 IST
The new tax regime comes with just a couple of deductions. Most significantly, a deduction for investments and expenses eligible under section 80C of up to Rs 1.5L is not available in the new regime. This has left steady investors of PPF, EPF, and other savings instruments in doubt about whether they should continue with these investments or not.
Individuals and HUFs can opt for a new tax regime from FY 2020-21 by giving up about 70 deductions/exemptions. The old regime allows for a deduction at the stage of investment which is unavailable in the new regime. While exemption for interest income and exemption on the maturity proceeds continues to be available in the new regime. So should one continue with these EEE investments? Let’s understand more.
In the table below, an individual having total income in the bracket Rs 5 to 15 lakh is tax neutral between the existing regime and new tax regime at the value of ‘Deductions’ indicated therein. Simply speaking, if one were to claim deductions as per column 2, tax outgo between the two regimes shall be the same. In a case the total deductions claimed exceed the value as per the ‘Deductions’ limit mentioned below, the old tax regime will be more beneficial, i.e. tax outgo will be lower in the old regime.
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First Published: Fri, October 23 2020. 19:57 IST