{"id":225277,"date":"2023-02-06T18:59:14","date_gmt":"2023-02-06T13:29:14","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=225277"},"modified":"2023-02-20T14:31:04","modified_gmt":"2023-02-20T09:01:04","slug":"the-tax-gambit-government-should-not-stop-nudging-people-towards-safe-long-term-savings","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-tax-gambit-government-should-not-stop-nudging-people-towards-safe-long-term-savings\/","title":{"rendered":"The tax gambit – Government should not stop nudging people towards safe, long-term savings"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cThe tax gambit – Government should not stop nudging people towards safe, long-term savings\u201d <\/strong>published in The Hindu <\/b>on 6th February 2023<\/b>.<\/p>\n

Syllabus<\/strong>: GS 3 \u2013 Government Budgeting.<\/p>\n

Relevance<\/strong>: About new income tax system.<\/p>\n

News<\/strong>: During the budget speech, the government introduced the new income tax system.<\/p>\n

What is the new income tax system?<\/strong><\/h2>\n\n\n\n
Read here: New tax regime gives spending flexibility<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The new system was based on the thought that the individual is the best judge of his\/her income.<\/p>\n

What are the advantages of the new income tax system?<\/strong><\/h2>\n\n\n\n
Read more: New income tax regime: A nudge on income tax mustn\u2019t become a shove<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Why new income tax system’s idea of the individual is the best judge of his\/her income is flawed?<\/strong><\/h2>\n

Though, the statement is individually valid the lower income earners will not benefit a lot from the system. This is because, a)<\/strong> Lower income earners do not save enough to avail of the tax exemptions and end up paying higher rates, b)<\/strong> India\u2019s low literacy and financial literacy levels will make taxpayers’ mix of consumption and savings complicated, c)<\/strong> Adult humans do not behave as rationally as economists and invest in inflation-beating investments, d)<\/strong> Financial products are routinely mis-sold to those not equipped to understand market nuances and the risks embedded, e)\u00a0<\/strong>India\u2019s retail participation in stocks may have risen in recent years, but not everyone can handle the risks of equity markets or avoid being tricked by influencer-operators.<\/p>\n

Above all, there are no universal social security and health benefits in India. The old exemption-based regime helps guide families towards some level of prudent asset allocation to cope with life\u2019s uncertainties.<\/p>\n

What should be done to make the new income tax system comprehensive?<\/strong><\/h2>\n

Before taking away the old tax regime the government must ensure adequate financial literacy efforts and crack down on unethical selling practices<\/strong> of stocks, insurance and other financial products. Further, if such a state is achieved then the government should revisit the idea of mandatory contributions<\/strong> to provident funds and pensions.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cThe tax gambit – Government should not stop nudging people towards safe, long-term savings\u201d published in The Hindu on 6th February 2023. Syllabus: GS 3 \u2013 Government Budgeting. Relevance: About new income tax system. News: During the budget speech, the government introduced the new income tax system. What… Continue reading The tax gambit – Government should not stop nudging people towards safe, long-term savings<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-225277","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700782673,"cached_date":1704824752},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/225277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=225277"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/225277\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=225277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=225277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=225277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}