4 years of PM Narendra Modi government: Income tax returns relief or pain? Find out
With Prime Minister Narendra Modi completing 4 years in office on May 26, a lot of major hits and misses during his tenure are being culled out. So, even as the BJP celebrates, it would be prudent for income tax payers to take a look at how much relief they got
With Prime Minister Narendra Modi completing 4 years in office on May 26, a lot of major hits and misses during his tenure are being culled out. So, even as the BJP celebrates, it would be prudent for income tax payers to take a look at how much relief they got. Notably, the government plans to bring in a Direct Tax Code that will replace the Income Tax Act of 1961. Existing I-T Act norms deal with personal income tax, corporate tax and other levies such as the capital gains tax. The new direct tax code, the draft of which will be ready by July, may provide relief to those in the 5 per cent and 20 per cent tax slabs.
Here is a recap of all the changes that personal taxation went through in the last four years:
2014-15: The BJP led NDA government raised income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh in Budget 2014-15 for individual taxpayers below the age of 60 years. For senior citizens, the limit was increased to Rs 3 lakh. Also raised was the deduction limit under Section 80C of the Income Tax Act by Rs 50,000 to Rs 1.5 lakh. Deduction limit for interest payable on home loan (self-occupied property) was also hiked to Rs 2 lakh, from Rs 1.5 lakh.
2015-16: In Budget 2015-16, the first full-year Budget the Modi government presented, health insurance premium deduction was raised from Rs 15,000 to Rs 25,000 and transport allowance was increased from Rs 800 per month to Rs 1,600 per month. The government also scrapped wealth tax but raised the surcharge by 2 per cent to 12 per cent for those having an annual income of more than Rs 1 crore. There was no change in income tax slabs.
2016-17: In Budget 2016-17, the tax rate for individuals in the lowest tax bracket - Rs 2.5 lakh to Rs 5 lakh - was cut to 5 per cent from 10 per cent. The government also raised the deduction limit under Section 87A of the Income Tax Act from Rs 2,000 to Rs 5,000 per annum. This section is applied to those with a total income of less than Rs 5 lakh. Besides, the surcharge on the super-rich (those with an income of over Rs 1 crore) was raised from 12 per cent to 15 per cent.
Budget 2017-18: Budget 2018 introduced no changes in the income tax rates and slabs for the FY 2018-19. However, cess has been hiked to 4 per cent from 3 per cent across the board for taxpayers. With this, the tax liability for the highest slab (assuming income of Rs 15 lakh) in fact increased by Rs 2,625. In the middle income tax slab, the tax outgo increased by Rs 1,125. A nominal increase in the tax liability of Rs 125 came in for lowest tax slab.