'Old tax regime to fade': Section 80C and tax-saving investments will soon be a thing of the past, say netizens

Union Budget 2023: The government has proposed to increase the tax rebate limit to Rs 7 lakh under the new tax regime. "Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes," Finance Minister Nirmala Sitharaman said.

She also revised the income tax slabs under the new tax regime, reducing the number of slabs to five from six earlier, and increasing the tax exemption limit to Rs 3 lakh.

However, there was no announcement made regarding taxpayers under the old tax regime.

"We are also making the new income tax regime as the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime," the FM said.

It is to be noted that the new tax regime was announced in Budget 2020 and became effective from financial year 2020-21 (April 1, 2020). The new tax regime eliminates several tax exemptions such as HRA, LTA, deduction up to Rs 1.5 lakh under Section 80C, among others, that are available under the old tax regime.

With no key announcements for the taxpayers under the old regime, users have taken to Twitter to express their disappointment.

"I think biggest disappointment seems to be the fact that 80C used to make a lot of forced investments towards the mkts. #Budget2023," a Twitter user wrote.

"I feel old tax regime would fade away in couple of years. All benefits are being given only for new tax regime which has almost no allowed deductions like Section 80C," another wrote.

"The Government wants to promote the new tax regime. So the exemption limit increased to 7Lkhs only in the new tax regime! Section 80C and tax-saving investments will soon be a thing of the past now!," wrote another.

"This Gov. is discouraging Tax saving investments like PPF,ELSS,EPF etc. By completely ignoring 80C benefit. Eventually In long run people will invest more in Equity and fund their core ideology of a capitalist economy. It will majorly impact the psyche of the masses #paisajeevi," said another user.

People claim that it is a big setback for the middle class.

"This isn't big. They should have done something for the old tax regime since a healthy majority are still there. 80c limit should have been increased considering we are paying tax indirectly on anything and everything now," said a user.

The new Income Tax rates are:

Rs 0-3 lakh - Nil

Rs 3-6 lakh - 5%

Rs 6-9 lakh - 10%

Rs 9-12 lakh - 15%

Rs 12-15 lakh - 20%

Above Rs 15 lakh - 30%

Also Read: Budget 2023 LIVE: We are moving along to become a $5 trillion economy, says FM Sitharaman