Glance on budgets presented under Mr. Modi government
Budget 2014 made a lot of taxpayers happy. It hiked the basic tax exemption limit from Rs 2 lakh to Rs 2.5 lakh in case of individuals. For senior citizens aged 60 and above but below 80 years, the tax exemption limit was hiked to Rs 3 lakh.
Along with that, deduction limit under 80C was also hiked by Rs 50,000 to Rs 1.5 lakh. Another demand of the middle class that was fulfilled was the hike in deduction on the interest paid on housing loans. Deduction under section 24 (interest paid on housing loan) was hiked to Rs 2 lakh from the previous limit of Rs 1.5 lakh.
In second budget of Narendra Modi government, there were no major changes announced in personal income tax slabs and rates. However, there were certain changes which helped the salaried class to save more tax. To make National Pension System (NPS) more attractive, additional deduction of Rs 50,000 was introduced under section 80CCD(1b) on the contribution made. This deduction was over and above the deduction of Rs 1.5 lakh available under section 80C, thereby making a tax-saving of Rs 2 lakh per fiscal.
For the salaried class, transport allowance limit was doubled from Rs 800 per month to Rs 1,600 per month. Another major change was the hike in deduction limit for health insurance premiums paid. For individuals, the limit was increased from Rs 15,000 to Rs 25,000. For senior citizens and very senior citizens, the limit was upped from Rs 20,000 to Rs 30,000.
Further, Sukanya Samriddhi Yojana was given tax exempt status – equivalent to PPF. Prior to budget announcement, contributions made to scheme was already eligible for deduction under section 80C but income earned and withdrawal was taxable.
On the other hand, there was some bad news for those earning more than Rs 1 crore. In his budget speech, Arun Jaitley hiked the surcharge on taxable income from 10 per cent to 12 per cent. At the same time, wealth tax was abolished.
Budget 2016 brought more bad news for the HNIs taxpayers (having income above Rs 1 crore) as surcharge was further increased from 12 per cent to 15 per cent.
For individuals living on rent but not receiving house rent allowance (HRA), budget 2016 brought some relief. Maximum deduction on rent paid under section 80GG was raised from Rs 24,000 to Rs 60,000.
For small and marginal taxpayers having income below Rs 5 lakh, tax rebate was hiked from Rs 2,000 to Rs 5,000.
For the property buyers, an additional deduction of Rs 50,000 was introduced under section 80EE provided all the other conditions are satisfied.
In Budget 2017, a rebate of Rs 12,500 was offered. This is because then Union Finance Minister, Arun Jaitley reduced the tax rate for income between Rs 2.5 lakh and Rs 5 lakh from 10 per cent to 5 per cent.
However, for the upper class, it also brought some bad news as the budget levied a surcharge of 10 per cent on individuals having income between Rs 50 lakh and Rs 1 crore.
The fifth budget of the Narendra Modi government was mixed bag. While it introduced a standard deduction of Rs 40,000 on salaried class and pensioners, it took away the tax benefits available on medical reimbursements and transport allowance, thereby providing a net tax benefit of Rs 5,800 only.
Cess was also increased by 1 per cent from 3 per cent to 4 per cent. The budget 2018 also introduced long-term capital gains tax on equity at flat 10 per cent without indexation benefit if gains are exceeding Rs 1 lakh in a financial year.
Expectations are high from the interim Budget that will be presented on February 1 by the acting finance minister, Piyush Goyal.