Explained: Does the new tax regime adversely affect household savings?

Critics, including former Finance Minister P Chidambaram, have criticised the Budget's focus on the new tax regime saying it does not motivate people to save. This focus, they say, is not good for developing economies that rely on both corporate as well as household savings to spur growth.

New tax regime does not have tax deductions as is given under various provisions such as 80C or 80D of the Income Tax Act.

Finance Minister Nirmala Sitharaman tried to sweeten the new tax regime by increasing the rebate limit to Rs 7 lakh from the earlier Rs 5 lakh. This meant