Good morning [%first_name |Dear Reader%],

Last week, I wrote about why, in the upcoming Budget on 1 February, the government should simplify capital gains tax laws in the country. Right now, the convoluted rules and differential treatment lead to investors putting money in asset classes based on tax benefits rather than on portfolio suitability.  

Tax breaks tilt the scales heavily in another contest too—the personal tax regime for individual taxpayers. Choice can complicate, and that’s what happened with Budget 2020. That year, the government gave us a choice: continue with the old personal tax regime or move to a new one. And there was a clear trade-off. The old tax regime has higher tax rates but also a plethora of tax deductions and exemptions that reduce taxable income. The new tax regime has lower tax rates but without the benefit of most tax breaks. 

So, folks had to do some number-crunching to figure out which system would work best for them.

Going by what’s happened over the past two years, the old tax regime has clearly retained its crown with a thumping majority.