Investment Strategy After Budget 2023: Finance Minister Nirmala Sitharaman has made some important changes in the budget for the financial year 2024 to promote the new income tax regime, although there has been no change in the old tax system. In the new tax regime, the number of tax slabs has been reduced from 6 to 5. At the same time, it was announced to give the benefit of tax rebates to those earning up to 7 lakhs instead of 5 lakhs. That is, there will be no tax on income up to Rs 7 lakh. The basic exemption limit has also been increased from Rs 2.5 lakh to Rs 3 lakh. Now the question arises that what should be the right strategy regarding the investment of those adopting the new tax regime.
Section 80C limit of IT Act not increased
Those who remained in the old tax system have been disappointed. There was no relief in that. The deduction limit has not been increased under section 80C of the Income Tax Act. In a way, they did not get any kind of incentive to increase their savings.
What to do with the new tax system
AK Nigam, director of BPN Fincorp, says that one thing needs to be understood here the government's focus is on the new tax system. Earlier, where savings for people were done keeping in mind the tax saving, that is, there was forced investment, now there is no such restriction. In the new tax system, not tax saving but returns will be important. At the same time, the focus of the new generation will be more on this than the old generation. The mindset of the new generation is more on returns, they are also ready to take risks as compared to the older generation. They are financially more educated.
New tax system: no binding of 80C
He says that in the new tax system, there will be no binding N sections of the IT Act, under which tax exemption is available. Investors who adopt this should think about investing after making a goal and seeing their risk profile. For example, how much risk they can take, for how long they have to invest, the goal of investment can be to buy a house, children's education and marriage, buy a car, or something like this. On this basis, they should choose the option. It is also important to see where they can get more returns.
Where to put money
AK Nigam says that if your goal is short-term and do not want to take too much risk from the market, then debt funds, especially those with maturity up to 1-year short duration, are a better option. In a way, it will also act as an emergency fund for you. There is no issue of liquidity in them either. Want to go in traditional FD of 1 year better is also an option.
If your investment goal is long term then go for equity. Investing in equity through mutual funds is safer than investing directly in shares. In this, Largecap, Midcap, Large and Midcap, Aggressive Balance Funds, and Mid and Smallcap Funds are looking better. According to him, the sectors in which the growth story is good can also be invested through sectoral funds.
