Impact of Income Tax Policy on Tax-Saving Investment Behavior: Evidence from Salaried Individuals
Keywords:
Income Tax Policy, Salaried Class, Tax-Saving Investments, Investment Behavior, Financial LiteracyAbstract
This study presents a behavioral analysis of the relationship between income tax policy and tax-saving investment options among salaried individuals. In India, salaried individuals use various investment instruments such as Public Provident Fund (PPF), Employees’ Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), and National Pension System (NPS) to reduce their tax liability. The research examines that investment decisions are not based solely on tax benefits but are also influenced by factors such as risk perception, financial literacy, income level, and psychological biases. The study uses both primary and secondary data to analyze how the new and old tax regimes affect investment behavior. The findings indicate that behavioral factors play a significant role, which in turn impacts the effectiveness of tax policy.
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