Old Tax Regime Vs New Tax Regime: There are currently two tax regimes in India. One new and one old. In the year 2020, the Government of India released the new tax regime. If we talk about it, most of the people are still filing income tax returns under the old tax regime. In India, more than 8.18 crore people file income tax returns. Out of which 85 percent people are still using the old tax regime. Which tax system is better for you?
To know this, you can use an online tax calculator and select both the tax regimes by looking at them on a comparative level. Because many people pay rent. Everyone gets money deducted in PF. Almost everyone has health insurance. Children’s tuition fees have to be paid. There is a home loan and there are many types of deductions. That is why you should see under which system you will have to pay less tax.
You don’t have to panic at all
Normally when new taxes are introduced, people get nervous. But if you do proper planning, then there is no problem. Always keep your long term investment goals in mind. If your goals are not achieved, then continue investing, do not stop it. But if you are investing without any planning and suddenly there is a change in the market, you get worried. Then you need to pay attention to your investment plan once.
Focus on Futures and Options Trading
Many people have said many things about future and option trading. SEBI chief Madhavi Puri Buch has said that ‘this is not a small but a big issue of investor protection.’ On the other hand, Chief Economic Advisor V. Anant Nageshwaran says that ‘the thought of more profit makes people addicted to gambling.’ But many retail traders do not benefit from this.
In the budget, the tax rate on futures and options trading has been increased by 0.2% and 0.1%. It is time for retail traders to think very carefully about futures and options trading. Because earning money is a long process. That is why retail traders should focus on their investment plans instead of earning quick profits.
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Invest in equity
Tax has been increased on investment in equity. If someone invests for less than 1 year, then 20% tax will be levied on it and 12.15% tax will be levied on investment for more than 1 year. This has definitely shocked people regarding investment in equity. But still investing in equity can be a great option.
According to BankBazaar’s Associate Vice President AR Hemant, you can invest here for a long time. For your pension fund, for your children’s education or for any other future planning. You can prepare a good investment plan by doing SIPP in a diversified equity fund like Nifty 50 Index Fund.
Debt Funds
Now when the tax is increasing, then you will have to find different ways to reduce the tax. You have to pay the highest tax on bank deposits. The income you get from FD is also taxed. That is why you can invest in debt mutual funds. In terms of tax, mutual funds and FD are the same.
But in this you will not have to pay TDS before redemption. By this you can postpone the tax liability. At present the interest rate is at a very high level, so you can think of investing in money market funds and liquid funds. These will give you low returns but there will be good liquidity and your money will be safe.
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Pay attention to property investment
If you hold real estate holdings for more than 24 months, then it becomes your long term asset. On which you have to pay 12.5% tax. Which is less than the previous 20%. But if you hold real estate holdings for a longer period, then you may have to pay more tax later. How? Let us explain with an example, suppose you bought a house worth Rs 40 lakh in August 2008-09 and sold it for Rs 1 crore in August 2024-25.
According to the old rules, you would have a capital loss of Rs 5.98 lakh on this and you would not have to pay any tax. But according to the new rules, you will have to pay 12.5% tax i.e. Rs 7.8 lakh (including 4% cess) on the profit of Rs 60 lakh. If your income is more than Rs 50 lakh. Then you will also have to pay surcharge. But if you invest your income from selling the property in another property under section 54 of Income Tax, then you get exemption in tax.
Investing in Gold
Due to the reduction in custom duty, people are again showing a lot of inclination towards buying gold. If you keep gold assets for a long period, then like real estate, here also you will have to pay 12.5% tax. Centralized banks around the world are collecting gold.
For this reason, its prices have been increasing rapidly in the last 5 years. It is giving returns equal to equity. In a market where uncertainty remains, gold has emerged as an excellent option. If you include gold investment in your portfolio in the right proportion, then you can benefit.
Pay attention to insurance
If you adopt the new tax regime, then you will not be able to avail the benefits of exemptions in life insurance policy and medical insurance policy. But just because of this, you should not think about not taking medical insurance and life insurance. Because avoiding illness and health should be more important than your financial security. If your family is financially dependent on you, then you must take a term plan. And also take a health policy for all the family members.
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