Letter to BS: New tax regime sans exemptions may encourage saving habits

Instances of people availing of short-term loans to put money in tax saving schemes, especially towards the end of the financial year, abound

Apropos your edit "Glide path for direct tax" (February 3), while the choice given to tax payers to transit to a new tax regime sans exemptions is forward looking, what must be debated is whether this option for the new age earners will result in increasing the rate of savings or make a further dent into the already declining savings habit. Experience suggests that inducing salary earners to save a few bucks to avail of tax benefits encourages them to buy savings products such as ELSS, ULIP, PPF and of late FDs in banks that are locked in for a