Income Tax changes introduced by Modi government in last 6 budgets
Here is a look back at the various income tax changes introduced by the Modi government in their first term.
Here is a look back at the various income tax changes introduced by the Modi government in their first term, i.e., from 2014 to 2019.
- Interim Budget 2019
One of the biggest measures was that no income tax will be payable by taxpayers with net taxable income up to Rs 5 lakh. Further, rebate available under section 87A was hiked to Rs 12,500 from Rs 2,500. However, even though no tax is payable for income up to Rs 5 lakh, individuals are still required to file their income tax return.
The amount under standard deduction was also hiked. It was raised by Rs 10,000 to Rs 50,000 from Rs 40,000.
Those who own a second house also had something to cheer about. The interim budget 2019 had done away with the notional tax on second self-occupied properties. Earlier, they were required to pay tax on the second house even if it was not let-out.
Individuals can save tax on long-term capital gains (LTCG) by investing the sale proceeds of one house into two houses. However, there is a catch. They can do this if the capital gains does not exceed Rs 2 crore and can be claimed only once in a lifetime.
For small depositors and housewives, the TDS threshold limit was raised to Rs 40,000 from Rs 10,000 on bank and post office deposits. However, do remember that there is no change in the way the incomes from these sources are taxed.
- Budget 2018
In addition to this, the cess levied on income tax payable was hiked to four per cent from three per cent.
LTCG tax on equity shares and equity-oriented mutual funds was also brought back at the rate of 10 per cent without indexation benefit. However, this tax is payable only if the gains exceed Rs 1 lakh in a financial year.
Budget 2018 had a lot in particular for one lot - senior citizens. The exemption of interest income with bank and post offices deposits was raised to Rs 50,000 from Rs 10,000. Similar changes were made in the TDS threshold limit.
Deduction on health insurance premiums paid for senior citizens and very senior citizens was hiked to Rs 50,000 from Rs 30,000. The benefit of deduction on medical expenditure incurred if not covered under any health insurance policy was extended from very senior citizens (age 80 years and above) to senior citizens (age above 60 years but below 80 years) as well of Rs 50,000.
- Budget 2017
However, for small taxpayers, the tax rate was lowered for income between Rs 2.5 lakh and Rs 5 lakh to 5 per cent from 10 per cent. This meant a saving of Rs 12,500 across all classes of taxpayers.
However, for individuals with two houses, there was some bad news. This is because the tax benefit available on loan repayment of the second house was restricted to Rs 2 lakh. Previously, this limit was applicable to only self-occupied property with no limit restrictions on the second house property.
- Budget 2016
For small taxpayers, there was relief for those who do not get House Rent Allowance (HRA). This is because the maximum deduction on rent paid under section 80GG was raised to Rs 60,000 from Rs 24,000, a hike of Rs 36,000.
Also, income tax rebate was hiked to Rs 5,000 from Rs 2,000 for small taxpayers having income below Rs 5 lakh.
Additional tax benefit of Rs 50,000 was introduced for homebuyers under section 80EE subject to certain conditions that must be satisfied.
- Budget 2015
A new section, 80CCD(1b), was introduced which allowed additional deduction of Rs 50,000. This deduction is available over and above the commonly available deduction under section 80C of Rs 1.5 lakh, thereby making tax saving of Rs 2 lakh in a financial year if invested.
For salaried class, transport limit was doubled to Rs 1,600 per month from Rs 800 per month.
Deduction amount available on health insurance premium under section 80D was hiked. For individuals, the limit was increased to Rs 25,000 from Rs 15,000. For senior citizens and very senior citizens, the limit was upped to Rs 30,000 from Rs 20,000.
To promote girl child education, Sukanya Samriddhi Yojana (SSY) was given tax exempt status - equivalent to PPF. Prior to Budget 2015 announcement, contributions made to SSY was already eligible for deduction under section 80C, but income earned and withdrawal was taxable.
On the other hand, for HNIs, Budget 2015 was a mixed bag. Though wealth tax was abolished, the surcharge levied on income tax payable for those earning more than Rs 1 crore was hiked by 2 per cent to 12 per cent from 10 per cent.
- Budget 2014
For senior citizens, aged above 60 years but below 80 years, the tax exemption limit was hiked to Rs 3 lakh.
Deduction available under section 80C was also hiked to Rs 1.5 lakh. For home owners, deduction available on interest paid on housing loan was hiked to Rs 2 lakh.