Goodbye, Old Tax Regime: A New Era of Smart Money Choices

Today marks the last day of the financial year 2024-25—and probably the end of the Old Tax Regime’s attractiveness. Looking back, I recall writing a blog in 2017 about tax-saving options. Even then, I had proposed an idea: it is better to pay tax and invest in financial products based on actual needs rather than chasing tax breaks. Much has changed since then on the exemption, deduction and taxation fronts.

For years, tax-saving incentives dictated financial decisions. Life insurance was primarily seen as a tax-saving tool rather than a risk management product. Health insurance, while slightly better understood as a necessity, still carried the appeal of tax deductions. Many people took home loans not just to buy a house, but because the tax breaks made them financially attractive. Some managed their EMI-to-income ratio wisely, but many took on unnecessary loans just to reduce taxes—without considering the bigger financial picture.

A Mindset Shift for a New Tax Regime

From April 1st, the focus must shift from saving taxes to making purposeful financial choices. As the saying goes, “When the why is clear, the how becomes easy.”

- Life insurance should be bought to protect your family and your investments—not just for tax deductions.

- Health insurance should be a safeguard against medical emergencies, not just a way to reduce taxable income.

- Home loans should be taken because you want to live in that home, not just because they once offered tax benefits.

- Traditional life insurance policies may still hold value, especially for those in the highest tax bracket, looking to replace part of their debt portfolio or real estate investments with tax-free cash flows.

Think Like a CEO—Because You Are One

Imagine you are the CEO of a company. Your duty is to increase shareholder value and grow the company. To do this, you must deploy capital wisely.

Would you invest everything into new buildings, plants, and machinery? No. You’d keep cash for short-term needs like salaries, explore acquisitions, and balance long-term and short-term goals. There’s no one-size-fits-all answer. Every decision requires careful thought about risk, return, and sustainable growth.

Now, shift that thinking to your personal finances. You are the CEO of your family. Your family members are your shareholders, and your responsibility is to enrich their lives.

How will you deploy the money you earn?

- Will you invest everything into real estate, hoping for appreciation?

- Will you put all your money into fixed deposits, playing it completely safe?

- Will you invest in financial assets that generate steady, tax-efficient returns?

When we view money as capital to be deployed, rather than just income to be spent, we make better financial decisions. This mindset helps us focus on optimal returns, financial security, and overall well-being.

What Will You Do With Your Extra Savings?

Under the new tax regime, salaried individuals should check with their company’s accounts team to finalize their tax regime selection. For those earning up to ₹12 lakhs, rebates could reduce their tax liability to zero. Higher-income earners could save around ₹1 lakh annually.

The real question is: What will you do with this extra amount each month?

Will you spend it mindlessly, or will you deploy it wisely—just like a CEO would?

The choice is yours.

Prasad Patwardhan 

VittaSiddhi 

QPFP®

Role of Personl Finance Professionals in the AI Age

A few days ago, I was traveling to the airport and checked Google Maps for the best transit route. It gave me the “fastest” options; trains, buses, and metro combinations. But there was a problem. Google Maps didn’t know that I had luggage. It didn’t know how crowded Mumbai local trains are during the peak hours. It suggested a "technically correct" route but not a practically sensible one. So, I used my judgment and opted for a radio taxi instead.

This experience reminded me of the role of personal finance professionals (PFP) in the age of AI.

AI vs. Human Intelligence in Finance

Today, AI-powered financial tools are everywhere. Robo-advisors build investment portfolios, tax calculators recommend savings strategies, and budgeting apps categorize spending. But can they truly understand the nuances of personal finance?

Much like Google Maps, AI-driven financial tools:

✅ Analyze historical data and trends

✅ Optimize for the “technically correct” choice

✅ Suggest the most efficient option based on algorithms

But real life isn’t just about efficiency; it’s about practicality, emotions, and unique personal situations. That’s where AI often falls short.

Let’s say two people, A and B, have the same income, expenses, and investment horizon. AI might suggest the same portfolio for both. But what if:

• A is a business owner with unpredictable cash flows?

• B is a salaried professional planning for a home loan in two years?

An AI tool won’t recognize these distinctions, but a PFP will.

The Human Intelligence Layer in Financial Planning

A good PFP does what AI cannot:

1️⃣ Understanding Behavioral Biases 

AI assumes you’ll act rationally, but human nature says otherwise. Investors panic during market crashes and get overconfident during bull runs. A PFP acts as a behavioral coach, keeping emotions in check and helping you stay the course.

2️⃣ Personalizing Strategies

AI applies formulae, but humans consider real-life context.

• You might have a high-risk appetite, but high liquidity needs.

• You might be risk-averse but need higher returns to reach a goal.

• You might have dependents, a family business, or unique financial responsibilities. 

These nuances don’t always fit into AI’s standardized recommendations.

3️⃣ Adapting to Real-Life Complexity

Life isn’t predictable. A bonus, job loss, sudden medical expense, or a child’s education plan changing; these require context-based decisions that a rule-based AI system cannot fully grasp. A PFP can modify plans dynamically, ensuring your plan evolves as your life does.

4️⃣ Providing Accountability & Guidance 

AI suggests, but who ensures you follow through?

• How many times have you set a budget but not followed it?

• Have you ever ignored a tax-saving solution despite knowing about it?

A human advisor not only guides but also ensures action is taken; something AI can’t do.

The Future: AI + Human Intelligence

The best approach isn’t AI versus Human; it’s AI + Human. AI is a powerful tool. It helps with number crunching, simulations, and pattern recognition. But personal finance isn’t just about calculations--it’s about decision-making, emotions, and life goals.

Much like how Google Maps provides directions, but local knowledge helps navigate real-world travel, AI will assist financial planning, but human advisors will refine, interpret, and personalize strategies.

👉 Technology will keep evolving, but human insight will always be essential.

Prasad Patwardhan 

VittaSiddhi 

QPFP®