Effectice last couple of Assessment years the assessees are given an option to choose between Old regime and New regime of Income tax. The option is inter changible and can be altered the next year. S 115 BAC provides for the shift. In a majority of the cases, the new regime looks less taxing.

Certain changes are made to the provisions this fiscal. However, the impetus to save has been removed from the tax provisions. List of deductons not permissible under new resume are given below.

Since propensity to save for future is now non existant, it makes a significant economic difference to the economy at macro level. Since ages, Life Insurance has been marketed as a tax incentive. Inflow of Insurnce premium from the public at large fuels a host of develpmental activites of the economy. With the tax incentive removed, the pipeline is bound to narrow down and consequently the resources for several of the welfare measures get impacted.

At the micro level, the person loses the impetus to save. Therefore the saving habbit gets impacted. And the said amount gets in to other sources but not savings. Might be people spend money on better eating joints, clothes, etc.

Host of deductions u/s 80 are withdrawn such as those under sections 80C, 80CCC, employee contribution u/s 80CCD, 80D, 80DD, 80DDB, 80E, 80EEA, 80G, 80TTA, 80TTB except those under 80CCD(2) and 80JJAA

Incentive for medical insurance is withdrawn. Tax deduction for chldren education, repayment of housing loan insurance premium paid, etc covered u/s 80C are no more eligible fordeduction.

Erstwhile deduction for interest on housing loan, subject, how ever, to limits are no more available. Setting off the loan under the head house property will not be eligible for set off against other heads, much less crrying it forward. The deductions withdrawn far outweigh the tax concessions offered.

In due course, the option might as well disappear and the new regime stays.