INVESTMENTS IN THE NEW TAX CODE

As per the proposed new tax code we have to pay tax on withdrawals made from insurance, deposits and even from epf ppf etc. So why one will save now to pay tax later on?
AnswerThe proposed new Tax code (EET) has an income shifting effect from one year to another. With EET and a higher Sec 80C investment limit, you actually avail that. For example, under the new Tax code, you make a FD with bank, get tax benefit now and withdraw it later when you do not have much income. Practically at that time, you either do not pay tax or pay it at a lower rate. That is actually one of the advantages of EET. However that will be effective provided the other associated changes are also put in place, like higher limit under Sec 80C, adequate number of permitted savings modes, etc.
As per the proposal the present EEE ( E= Exempt ) regime would be transformed to EET ( T= Tax ). Hence one need to pay tax at some level