New Tax Regime: Should one continue to invest in tax saving instruments such as PF, PPF, LIC?

livemint.com:

Union Budget 2020-21 which provided for lower tax rates for individuals compared to tax rates under the old tax regime. However, it comes with the condition that a taxpayer has to forego several deductions and rebates available under the old tax regime. An individual has an option to choose either old tax regime or new tax regime for each financial year.

However, based on developments in subsequent years, it is apparent that the government is looking to make new tax regime more attractive progressively. Under the old tax regime, deduction from taxable income was available under Section 80 C in respect of certain specified investments viz contribution to Provident Fund, Public Provident Fund, LIC, ELSS, NPS and so on . Maximum amount permissible for deduction in a financial year is ₹1,50,000.

As the tax benefit is now foregone for an individual opting for new tax regime, he/she needs to evaluate afresh investment decision based on three fundamental principles of safety , liquidity and return. Let us evaluate the popular investment avenues which were covered under sections 80C: In respect of salaried employees, PF contribution is a mandatory requirement under Employees’ Provident Fund and Miscellaneous Provisions Act 1952 (“PF Act") to take care of post-retirement funds requirement of the individual. It is considered risk free investment and has been providing about 8% annual return (declared annually by the govt) which is also exempt from tax.