New tax regime to shorter period for I-T refunds: PM Modi lists NDA govt's achievements since 2014

Prime Minister Narendra Modi on Saturday elaborated on the significant changes his government brought since it came to power in 2014. Noting some of them, he said his government launched new ministries and prioritised the development of Northeast. He added that his government gave more power to taxpayers by reducing the tax slabs under the new tax regime. 

Speaking at the final session of India Today Conclave, PM Modi said: "In 2014, people had to give tax on an annual salary of Rs 2 lakh. Today, people with Rs 7 lakh annual income don't have to pay even a single rupee." 

The average time for income tax refunds has been reduced from 93 days before 2014 to less than 10 days now, he added.

The new tax regime was introduced in 2020 in a bid to reduce the complicated tax slabs under the Old Tax Regime. The new tax regime reshuffled the income tax slabs and proposed to remove about 70 tax exemptions provided under the Old Tax Regime. 

Initially, income between Rs 5 lakh and Rs 7.5 lakh was to be taxed at 10%, down from then tax rate of 20%. Similarly, income between Rs 7.5 lakh and Rs 10 lakh were proposed to be taxed taxed at 15%, much lower than the 20% rate under the Old regime. 

Income between Rs 10 lakh and Rs 12.5 lakh was proposed to be taxed at 20%, which was strikingly lower than the current 30%. For incomes between Rs 12.5 lakh and Rs 15 lakh, the rate was intended to be 25%, down from 30%.

The NDA government in the last 10 years has brought many changes in the tax system. Here are a few highlights:

1. 2014: After winning the polls, the first Finance Minister of the new govenment was late Arun Jaitley. He presented his first Union Budget where he raised the personal income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh. For senior citizens, the exemption limit was increased from Rs 2.5 lakh to Rs 3 lakh. 

The limit for deduction under Section 80C was increased to Rs 1.5 lakh from Rs 1 lakh while deduction limits for interest on home loan was increased to Rs 2 lakh from Rs 1.5 lakh.

2. 2015: The deduction limit on health insurance premiums was raised from Rs 15,000 to Rs 25,000 for the general public

- The deduction limit on health insurance premiums was increased to Rs 30,000 from Rs 20,000 for senior citizens. 

- The transport allowance exemption was also increased from Rs 800 to Rs 1,600 per month.

- An additional deduction of Rs 50,000 for contribution under the National Pension Scheme (NPS) under Section 80 CCD.

- Surcharge for income above Rs 1 crore was increased to 12% from 10%.

- Wealth tax was abolished

- An additional surcharge of 2% on the super-rich who had a taxable income of more than Rs 1 crore.

3. 2016: The tax rebate was raised from Rs 2,000 to Rs 5,000 for those with income not exceeding Rs 5 lakh per annum under Section 87A.

- The limit of deduction on rent paid under Section 80GG was also raised from Rs 24,000 per year to Rs 60,000 per year.

- Surcharge for income above Rs 1 crore was increased to 15% from 12%.

- The budget also imposed a 10% income tax on dividends in excess of Rs 10 lakh annually. 

4. 2017: The tax rate was reduced from 10% to 5% in the Rs 2.5 lakh-Rs 5 lakh bracket. 

- The tax rebate under Section 87A was slashed from Rs 5,000 to Rs 2,500, applicable to those taxpayers whose annual income is up to Rs 3.5 lakh.

- A surcharge of 10% was introduced on those with annual taxable income between Rs 50 lakh and Rs 1 crore.

5. 2018: A standard deduction of Rs 40,000 brought in with current exemption in transport allowance and reimbursement of miscellaneous medical expenses.

- Deduction for medical expenditure was raised to Rs 50,000 from Rs 30,000 for senior citizens.

- Deduction for interest income earned on deposits with banks, and post offices were increased to Rs 50,000 from Rs 10,000 in the case of senior citizens, along with an exemption from the deduction for tax for interest income up to Rs 50,000. 

- The decision to tax long-term capital gains exceeding Rs 1 lakh at the rate of 10% without allowing the benefit of any indexation.

6. 2019 (Election year): The interim budget wooed the middle class by exempting taxes for those earning less than Rs 5 lakh. There was zero tax on their earnings.

- The standard deduction was also increased to Rs 50,000 from Rs 40,000 for the salaried class.

7. 2020: The NDA government brought in New Tax Regime in FY2020-21 giving an alternative for taxpayers. It permitted them to opt between maintaining their current income tax modus operandi with the advantage of leveraging established income tax exemptions and deductions; or transitioning to a newly unveiled regime featuring lowered rates of income taxation and restructured threshold limits for distinct slabs, albeit without any provision for exemptions or deductions pertaining to taxes.

Zero tax for income up to Rs 2.5 lakh

5% for income between Rs 2.5 lakh and up to Rs 5 lakh

10% for income between Rs 5 lakh and up to Rs 7.5 lakh

15% for income between Rs 7.5 lakh and up to Rs 10 lakh

20% for income between Rs 10 lakh up to Rs 12.5 lakh

25% for income between Rs 12.5 lakh and up to Rs 15 lakh

30% for income above Rs 15 lakh

8. 2021: The government introduced pre-filled income tax returns (ITR) forms, higher tax deduction at source (TDS) for non-filers of income tax returns, and exemption of dividend payment to REIT/ InvIT from TDS among others.

9. 2022: No major changes in personal income tax slabs or rates. The government provided a one-time window to correct omissions in income tax returns (ITRs) filed. The Finance Minister announced a new tax rule for taxpayers where a taxpayer can file an updated return on payment of taxes within two years from the end of the relevant assessment year. Besides, 30% tax levied on the proceeds of virtual/digital assets. The tax deduction limit for state government employees' contribution to NPS raised to 14% from 10%. 

10. 2023: The Budget proposed to make new income tax regime the default option. Basic exemption limit was hiked up to Rs 3 lakh from Rs 2.5 lakh under the new income tax regime. No LTCG tax benefit on some debt mutual funds are some of the major changes effective from 1 April 2023. Extension of rebate for annual income up to Rs 7 lakh, applicable to people under the new income tax regime. A standard deduction of Rs 50,000 was introduced under the new income tax slab. 

New tax slabs were like:

> No tax for income of up to Rs 3 lakh. 
> Income above Rs 3 lakh and up to Rs 5 lakh: 5%. 
> Rs 6 lakh and up to Rs 9 lakh: 10%. 
> Rs 12 lakh and up to Rs 15 lakh: 20%. 
> Income of above Rs 15 lakh: 30%

11. 2024: No changes to the income tax regimes were announced by Finance Minister Nirmala Sitharaman in the Interim Budget 2024-25. 

FM Nirmala Sithaman gave relief to over one crore taxpayers after she said the government will not pursue the recovery of old and disputed direct taxes up to Rs 25,000 until the financial year 2009-10. 

Additionally, direct tax demands up to Rs 10,000 for the financial years 2010-11 to 2014-15 will be withdrawn.