Q1. Difference between New tax regime and old tax regime.

Ans. Old Tax Regime

Under the old structure of taxation, the assessee can claim the deduction, exemptions, and
allowances with which they can have proper tax planning and save taxes.

The existing tax structure is convoluted. Despite the high tax rates, there are several
strategies to lower your tax obligation. The government has provided Indian taxpayers
approximately 70 exemptions and deduction choices through the addition of sections to the
Income Tax Act throughout the years, allowing them to reduce their taxable income and
hence pay less tax.

Some exemptions are included in your income, such as the House Rent Allowance (HRA) and
Leave Travel Allowance (LTA). The deductions allow you to lower your tax obligation by
investing, saving, or spending on specific items. Section 80C is the most popular and
generous deduction, allowing you to reduce your taxable income by up to Rs.1.5 lakh.
Besides that, there are several more exemptions and deductions most widely available for
the taxpayers.

Deductions and Exemptions Under Old Tax Regime

Deductions Exemptions

Public Provident Fund House Rent Allowance

Equity Linked Savings Scheme (ELSS) Leave Travel Allowance

Employee Provident Fund Mobile and Internet Reimbursement

Life Insurance Premium Food Coupons or Vouchers

Principal and Interest component of Home Loan Company Leased Car

Children Tuition Fees Standard Deduction

Your taxable income might be reduced by lakhs due to a combination of exemptions and
deductions. Hence, tax planning is imperative to maximize your income, savings, and
investments each year in order to limit your taxable income to a minimum.

Advantages of Old Tax Regime

The old income tax regime instilled a savings culture in individuals over time by requiring
investments in specific tax-saving instruments. It leads to saving for future events such as
marriage, schooling, home purchase, medical, etc.

Limitations of Opting for the Old Tax Regime

In Spite of having many advantages, the old tax structure has its limitations too. The
limitations of the old tax regime are as follows:

The investment lock-in period hurts liquidity.

Current level of consumption owing to committed amount of investments.

There are a limited number of tax-saving investments available.

Evidence retention of deductions claimed is a hassle.

Not advantageous for taxpayers with nil or lower transactions eligible for tax deductions

New Tax Regime

It has six tax slabs, each having a lower rate on income up to Rs. 15 lakhs. Multiple exemptions
and deductions are not available due to the varying income slabs and tax rates. There are
benefits and drawbacks to the new tax regime.

In two ways, the new tax scheme differs from the previous one:-

1. The number of tax slabs has expanded under the new system, with reduced rates in the
range of Rs. 15 lakh brackets.

2. In the new regime, all the exemptions and deductions that taxpayers used in the old regime
will be unavailable.

Advantages of Opting for the New Tax Regime

The benefits of the new tax structure are as follows:-

The present tax regime is still in effect and the taxpayer has the option of choosing between
the old and new tax regimes that best fit your needs. The government has not imposed any
penalties for failing to convert to the new tax regime.

The new tax regime allows taxpayers to invest their money without any preconceived
limitation. There are no mandatory rules and regulations governing your investment pattern
under the new program.

With numerous tax slabs, you, the taxpayer, will fall into the one that best matches your
annual income.

Income Tax Slab Rates for New Vs Old Tax Regime

Old Tax Slabs Old Income Tax Rates New Tax Slabs New Income Tax Rates

Upto Rs 2.5 lakh NIL Upto Rs 3 lakh NIL

Rs 2.5 – Rs 5 lakh 5% Rs 3 lakh – Rs 6 lakh 5%

Rs 5 – Rs 10 lakh 20% Rs 6 lakh – Rs 9 lakh 10%

Above Rs 10 lakh 30% Rs 9 lakh – Rs 12 lakh 15%

Rs 12 lakh – Rs 15 lakh 20%

Above Rs 15 lakh 30%

Illustration on Income Tax Calculation (Old vs New Tax Regime)

Particulars Old Tax Regime New Tax Regime

(Rs.) (Rs.)
Annual Income 40,00,000 40,00,000

Less: Standard Deduction 50,000 50,000

Less: Section 80C

(EPF +LIC+ Tuition Fees, etc) 150,000 Nil

Less: House Rent Allowance 50,000 Nil

Less: Health Insurance- self and

spouse- parents (if senior citizen) 25,000+50,000 Nil

Less: Leave Travel Allowance 25,000 Nil

Less: New Pension Scheme

80CCD (1B) 30,000 Nil

Total (Deduction & Exemption) 3,80,000 Nil

Net Taxable Income

(Annual Income – Total deductions

& exemptions) 36,20,000 39,50,000

Total Tax Payable as per Old Regime

Income Tax Slabs (Rs.) Old Tax Rates Tax (Old) (Rs.)

0 – 2,50,000 0% ₹0

2,50,000 – 5,00,000 5% ₹12,500

5,00,000 – 7,50,000 20% ₹50,000

7,50,000 – 10,00,000 20% ₹50,000

10,00,000 – 12,50,000 30% ₹75,000

12,50,000 – 15,00,000 30% ₹75,000

15,00,000 & above 30% ₹636,000

Total taxes ₹898,500

Add: Higher Education Cess @4% ₹35,940

Total tax payable ₹934,440

Total Tax Payable as per New Regime (FY 23-24 & AY 24-25)

Income Tax Slabs (Rs.) New Tax Rates Tax (New)(Rs.)

0 – 3,00,000 0% ₹0

3,00,000 – 6,00,000 5% ₹15,000

 6,00,000 – 9,00,000 10% ₹30,000

9,00,000 – 12,00,000 15% ₹45,000

12,00,000 – 15,00,000 20% ₹60,000

Above 15,00,000 30% ₹735,000

Total taxes ₹885,000

Add: Higher Education Cess @4% ₹35,400

Total tax payable ₹920,400

So, you can see here the new tax regime turns out to be better. Opting for the new tax regime
instead of the old regime will result in lower taxes by Rs 14,040.

Q2. Compare the policies and plans of five different life insurance companies.

Ans.

Company Plans/Schemes Policy

LIC (Life insurance LIC Retire Plan: Everyone The Whole Life Policy
corporation of should save enough to live from LIC is a simple
India) a financially protected regular payment whole
retirement life. LIC of India life plan along with Bonus
offers several pension facility.
plans to guarantee
In this plan, the premium
financial stability in old
is paid for 35 years or till
age. One of the Latest LIC
the life insured is 80 years
Pension Plan is the LIC
old. The Life Insured can
New Pension Plus Plan,
choose to withdraw the
which offers market-linked
Sum Assured + accrued
returns and a regular
Bonuses declared under
pension source.
the policy anytime after
These are the four other 40 years from the date of
pension plans that LIC of commencement of the
India offers: policy provided the life
insured has attained a
LIC New Jeevan Shanti
minimum age of 80 years.
LIC New Pension Plus Plan However, if the Life
Insured dies, then his
LIC Jeevan Akshay- VII nominee would be given
Pradhan Mantri Vaya the Sum Assured +
Vandana Yojana accrued Bonuses and the
policy would be
terminated.
SBI Life Insurance SBI provides various The SBI Term Insurance
retirement plans to build a Plans are pure risk plans,
relaxing post retirement which provide only death
life for their customers. benefit at the time of an
The various plans are unfortunate demise of
explained in below: SBI the life assured. Out of all
Life: Saral Pension is a the term plans of SBI Life,
traditional pension plan the eShield Next is loaded
for senior citizens. with benefits and offers
more coverage at
SBI Life: Retire Smart is a
different stages of life.
unit linked pensioned
The SBI Life term plans
plan. This pension plan
also offer additional
guarantees an addition of
riders which enhances
up to 210% of annual
the coverage in case of
premium.
accidental death and
disabilities. However,
these plans do not offer
any maturity and survival
benefits.

Reliance Nippon Reliance Nippon Life Reliance Whole Life Plan

Life Insurance Retirement plans are the is a non unit-linked
best way to ensure that insurance traditional plan
you continue to live in with Bonus facility.
comfort after resigning
In this policy, the
from professional life.
premium paid till the end
These plans require you to
of the Premium Paying
make regular contribution
Term as selected.
which keeps adding up to
provide you with a regular On reaching the age of 85
monthly income once you years, the entire Sum
have retired so that you Assured + accrued Bonus
can carry on with the is paid but the insurance
same standard of living as cover continues till the
you did while working. end of 99 years and
Reliance Nippon Life offers bonus is also paid till
retirement plans which then.
are as follow:
Now, whenever the Life
Reliance Nippon Life Insured dies, then the
Immediate Annuity Plan: nominee would receive
Convert your lump-sum the full Sum Assured
savings into a regular along with accrued Bonus
income so as not to and the policy would be
compromise with your terminated.
lifestyle once you are
retired.
 Reliance Nippon Life Smart
Pension Plan: This is a
non-participating ULIP
that helps you save
systematically to ensure a
better retirement fund
once you no longer have
that regular income from
your job. Avail tax benefits
as applicable. Plan Type
Basic Sum Assured Tenure.

HDFC HDFC Life Retirement HDFC Life Whole of Life

Plans: The HDFC Life Insurance-Single Premium
Standard
retirement solutions offer Plan is a Whole Life
Life Insurance financial security to ensure Participating Insurance
that you will have a Plan with Lump Sum
regular income even when Investment Opportunity.
your professional income It is a Traditional Plan
no longer flows into your with Bonus facility.
account. These plans help
How it works – In this
you live a comfortable life
plan, premium can be
whilst dealing with rising
paid in a lump sum under
inflation and the increased
Single Premium Option
cost of living. Following
but the policy continues
are the retirement plans
till the end of the policy
you can purchase from
tenure.
HDFC Life:
In this plan, premium
HDFC Life Personal
needs to be paid in a
Pension Plus: This pension
lump sum. Thus, if the
plan from HDFC provides
Life Insured dies, the Sum
you with an assured
Assured + the accrued
benefit of 101% of the
Bonus are paid as Death
premiums paid in case of
Benefit and the policy
vesting or death. Also, the
terminates. There is
plan allows you to choose
Compounded
an investment period
Reversionary Bonus as
between 10 years and 40
well as Terminal Bonus in
years. Reversionary
this plan
bonuses and terminal
bonus are offered under Being a Whole Life Plan,
the policy. the plan continues till
death. However, the
HDFC Life Pension Super
money can be withdrawn
Plus: This plan offers an
after the 10th Policy
assured 101% of all
Anniversary or on every
premiums paid. There is
5th year after that.
flexibility to choose tenure
 and guaranteed regular
income in case annuity is
purchased.

HDFC Life Guaranteed

Pension Plan: Guaranteed
Pension Plan from HDFC
Standard Life is a deferred
pension plan that offers
assured payouts at vesting
or death. The plan offers
the flexibility of choosing
the premium payment
term.

Bajaj Allianz Life Bajaj Allianz retirement Contrary to regular life

plans are ideal for insurance policies, a
Insurance
individuals looking to whole life insurance
secure their post- policy offers insurance
retirement years. coverage for the entire
Retirement policies will life i.e. in most cases until
ensure a continuous flow the age of 99 years. The
of income for a nominees are paid the
considerable period of sum assured whenever
time. These plans are the insured dies before
systemic saving plans that the age of 99 years. Let us
help you prepare for your understand with an
retirement by organising example, the nominee
your savings. Following are would not be paid
the retirement plans anything if insured dies at
offered by Bajaj Allianz. the age of 65 and the
tenure of the policy was
Retire Rich: This is a unit-
only till 60 years. In the
linked, pension plan that
case of whole life
offers a guaranteed
insurance policy, the
vesting and guaranteed
nominees will be paid the
death benefit. The policy
sum assured if the
buyer can opt for a
insured dies any time
regular, limited, or single
before the age of 99
premium payment term.
years. The premiums of
Premium payment terms
whole life insurance plans
can also be adjusted as per
remain constant
the customer's choice.
throughout the policy
Premiums can be topped
term. The premium is
up too, as the case may
finalised after taking into
be. Tax benefits can be
account various factors
applicable for premium
like age, occupation and
paid, maturity benefit and
smoking habits of the
death benefit. Loyalty
 additions are made insured. However, once it
available for terms more is decided, the premiums
than 10 years. do not change. Whole life
insurance plans provide
Pension Guarantee: The
financial protection for
Pension Guarantee plan
the entire life. The
from Bajaj Allianz is an
coverage lasts until 99
immediate annuity plan,
years, which is the
which will ensure that you
highest age until which
continue to earn a regular
life insurance can be
income even after you
extended.
have retired from your
job. This plan comes with
annuity options to choose
from and lasts for your
lifetime.

Q3. What is Ponzi Scheme? and Discuss the case of Harshad Mehta.

Ans. A Ponzi Scheme is a fraudulent investment operation where the operator, an individual or an
organization, claim that money is invested in high return earing instruments. However, what
really happens is that every new deposit is used to pay off earlier deposits rather than from
profit earned through legitimate sources. Typically, extraordinary returns are promised on the
original investment. The fraudster will vanish with investor’s money, so the system eventually
collapses with later investors receiving nothing including their initial investment. There are
online Ponzi schemes as well. The largest Ponzi scheme in history, which defrauded
approximately $ 65 billion, was run by Bernard Madoff, who was attested in 2008. He is still
serving a 150- year sentence in prison. It is important to check the authority possessed by
deposit/ investment takers to accept money from the general public. Guaranteeing high
investment returns with zero risk and insistence to roll over the investment should be
identified as red flags. People need to make sure that their assets are always held by a
legitimate entity.

Now Discuss the case of Harshad Mehta:

Who is Harshad Mehta?

Harshad Shantilal Mehta was an Indian stockbroker and a convicted fraudster. Mehta's
involvement in the 1992 Indian securities scam made him infamous as a market manipulator.
He was born on 29 July 1954, at Paneli Moti, Rajkot district, in a Gujarati Jain family. His early
childhood was spent in Borivali, where his father was a small-time textile businessman. He did
his early study in Janta Public School, Camp 2 Bhilai. A cricket enthusiast, Mehta did not show
any special promise in school and came to Mumbai after his schooling for studies and to find
work. Mehta completed his B.Com in 1976 from Lala Lajpatrai College, Bombay and worked a
number of odd jobs for the next eight years. Mehta started his career as a sales person in the
Mumbai office of New India Assurance Company Limited (NIACL). During this time, he got
interested in the stock market and after a few days, resigned and joined a brokerage firm. In
the early 1980s, he moved to a lower level clerical job at the brokerage firm Harjivandas
Nemidas Securities where he worked a jobber for the broker Prasann Pranjivandas Broker who
he considered his "Guru".

Introduction to the Harshad Mehta Scam

The 1992 stock market scam is often referred to by the perpetrator’s name who brought about
the downfall of the stock market: Harshad Shantilal Mehta. The scam featured an
embezzlement of Rs 1439 crores ($3 billion) that led to a severe crunch and drastic loss of
wealth in the life savings of many investors that amounted to Rs 3542 crores ($7 billion).
Harshad Mehta is also framed as a victim due to alleged political alliances that included
prominent governmental figures. However, it remains true that Mehta exploited the
loopholes for his personal benefit, manipulated the market and was heavily involved in
many banking frauds.

Understanding Harshad Mehta Scam

In a country broken under major political and policy based economic reforms with the
liberalization, privatization and globalization (LPG) process of opening the economy to the
world, Mehta thrived and was rich beyond the existing standards. Mehta had what people
could consider a rags to riches story: from being a mere immigrant to the city to becoming a
renowned stock broker in BSE. He was called the ‘Big Bull’ after resounding success with his
Grow More Research and Asset Management firm after many a series of odd jobs. He owned
shares of Associated Cement Company (ACC), which saw an inexplicable surge in price from a
mere Rs. 200 to a Rs. 9,000. Mehta justified that the stock had only been undervalued all
along, prompting a market wave of investors flocking to his investment choices. The
bandwagon, coupled with the broken financial system that was beginning to find its foothold
in the country that Mehta saw his benefit in, led to the market’s downfall. The key reasons
why Mehta is held accountable for crimes is due to his heavy involvement in market
manipulation, exploiting the loopholes of the banking system, embezzlement etc.; he was
convicted for 23 crimes, but he died in prison after being charged for only four.

Highlights of Harshad Mehta Scam

The key instruments used in the great scam were stamp papers, bank receipts, ready forward
deals, and higher interest rates. Sucheta Dalal exposed Mehta’s crimes and involvement in the
columns of Times of India in 1992 after taking keen interest into his overly luxurious lifestyle.
As valued in 2019, the Harshad Mehta scam had swindled nearly Rs. 250 Billion from the
banking system. The effects of the scam, while not persisting directly, still affect the
conservative investors’ mindsets. Ketan Parekh, an associate working under Mehta, would
later go on to reanimate a similar crime in the stock market in 2008 and be convicted for his
involvement in market manipulation in 1992.