Finance Minister Nirmala Sitharaman who presented Union Budget 2020 in Lok Sabha on February 1 announced new income tax rates for the common man. Rolling out new personal income tax regime she said that, "income tax rates will be significantly reduced for individual taxpayers who forego certain deductions and exemptions".
"I have reviewed all the exemptions and deductions which got incorporated in the income taxes legislation over the several past decades. It was surprising to know that currently more than 100 exemptions and deductions of different nature are provided in the Income-tax Act. I have removed around 70 of them in the new simplified regime," the FM said.
Here is a look at the changes in the income tax rules announced by the Modi government since 2014.
FULL COVERAGE:Union Budget 2020
1. Budget 2020 (February)
- Personal income tax rate cut for individuals for fiscal year 2020-21
- Under the new regime, taxpayers will pay 10%, 15%, 20% and 25% for incomes between Rs 5-7.5 lakh, Rs 7.5-10 lakh, Rs 10-12.5 lakh and Rs 12.5-15 lakh, respectively.
- To avail this scheme, which is optional, taxpayers will have to let go of exemptions
- The new personal income tax rates will entail estimated revenue foregone of Rs 40,000 crore per year
- Dividend Distribution Tax (DDT) removed. Will be applicable to individual investors only.
2. Budget 2019 (June):
- Increase in customs duty on gold and precious metals to 12.5%.
- Levy of a 2% tax deduction at source (TDS) for cash withdrawals in excess of Rs 1 crore per annum.
- Customs duty on steel increased to 7.5% from 5%.
- Companies with an annual turnover of Rs 400 crore brought under 25% tax bracket.
- Relief on securities transaction tax (STT).
3. Budget 2019 (February):
- Nil tax on income up to Rs 5 lakh a year.
- Nil tax on income between Rs 5 lakh-Rs 6.5 lakh (if the taxpayers made any investments).
- Full tax rebate for taxpayers with an annual income of up to Rs 5 lakh.
- Standard deduction increased to Rs 50,000 from Rs 40,000.
- Capital gains made from the sale of residential property qualify for exemption under Section 54 of the Income Tax Act (for two properties bought).
- TDS limit on rental income increased to Rs 2.4 lakh from Rs 1.8 lakh.
- TDS limit on interest earned from postal savings and bank deposits increased to Rs 40,000 from Rs 10,000.
4. Budget 2018
- Standard deduction of Rs 40,000 introduced for salaried individuals.
- Education Cess hiked to 4% from 3%.
- Exemption of interest income earned by senior citizens on post office savings, bank deposits raised to Rs 50,000 from Rs 10,000.
- Deduction limit for health insurance premium (medical expenditure) paid by senior citizens hiked to Rs 50,000 from Rs 30,000 (Under Section 80D of the Income Tax Act).
5. Budget 2017
- 10% surcharge on income of Rs 50 lakh-Rs 1 crore.
- Income tax rate on income of Rs 2.5 lakh-Rs 5 lakh reduced to 5% from 10%.
- Rebate under Section 87A reduced to Rs 2,500 from Rs 5,000 for individuals earning between Rs 2.5 lakh-Rs 3.5 lakh.
- Deduction on investment in Rajiv Gandhi Equity Saving Scheme abolished.
- Fine of up to Rs 10,000 on individuals who fail to file their returns on time.
6. Budget 2016
- Tax rebate for salaried individuals earning an income of up to Rs 5 lakh increased to Rs 5,000 from Rs 2,000.
- Surcharge on total income of over Rs 1 crore raised to 15% from 12%.
- First-time home buyers got an additional deduction of Rs 50,000 on interest for loan up to Rs 35 lakh (provided the house value doesn't exceed Rs 50 lakh).
- Limit for contribution of employer in recognised provident and superannuation fund of Rs 1.5 lakh per annum for taking tax benefit.
7. Budget 2015
- Hike in surcharge on income above Rs 1 crore to 12% from 10%.
- Wealth tax abolished.
8. Budget 2014
- Income tax (basic) exemption increased by Rs 50,000 to Rs 2.5 lakh for salaried individuals and Rs 3 lakh for senior citizens.
- Tax exemption limit for investments by individuals in financial instruments under 80C raised to Rs 1.5 lakh
- Deduction limit on account of interest on loan in respect of self-occupied house property increased from Rs 1.5 lakh to Rs 2 lakh.
- Launch of a special small savings instrument for girl child and a National Savings Certificate with insurance.