The Movement To A New Tax Regime Will Be A Smart Move: SBI Research

The movement to a new tax regime will be a smart move by existing taxpayers in search of simplicity and more disposable income, SBI Research has said in a report.

"The Government has addressed the issue that the new tax regime could be regressive, with the exemption limit at the lower end increased significantly from Rs 5 lakh to Rs 7 lakh. We believe, the movement to a new tax regime will be a smart move by existing taxpayers in search of simplicity and more disposable income. The overall impact of consumption multiplier will be significant," the research report adds.

According to SBI Research, the Budget proposes to move to a clutter free new tax regime. Currently, the current incentives tend violates the principle of equity and efficiency without generally enhancing savings at macro level. "Therefore, the continuation of different tax incentives on various financial assets needed a relook and the budget has made the right move in making the new tax regime the default option. The new tax regime distinguishes between long-term savings, and short- and medium-term savings as far as the tax treatment are concerned. Further, Government proposes to make NTR as the default tax regime supports the Government's initiative to digitise and simplify the tax process for individuals. This would also mean significant changes in the payroll procedures of employers for salaried taxpayers," the report adds.