Budget 2020: Across 7 budgets of Modi govt, here are the key changes in Income Tax policy

Since coming to office in May 2014, the NDA government led by PM Modi has presented 7 budgets. The budgets were presented by three different Finance ministers in Arun Jaitley, Piyush Goyal, and Nirmala Sitharaman. The changes introduced by them with reference to the income tax policy underwent a gradual evolution.  

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2014: First budget

Presenting the Narendra Modi government’s maiden budget, Finance Minister Arun Jaitley raised the income tax exemption limit from Rs.2 lakh to Rs.2.5 lakh. Senior citizens benefited with the increase in exemption limit to Rs.3 lakh. While the deduction limit under Section 80C was increased to Rs.1.5 lakh, the deduction limit for interest on the home loan was increased to Rs.2 lakh 

2015: Abolition of wealth tax

While the income tax slabs remained unchanged, a big move was the abolition of wealth tax that was replaced by a 2% increase in surcharge on people having a taxable income of more than Rs.1 crore. Moreover, Jaitley increased the deduction limit on the health insurance premiums and the transport allowance exemption. He also announced an additional deduction of Rs.50,000 for contributions under the National Pension Scheme.  

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2016: Increase in surcharge on super-rich 

The surcharge for income above Rs.1 crore was increased to 15%. Moreover, Jaitley increased the deduction limit on rent paid under Section 80GG from Rs.24,000 to Rs.60,000. Also, the budget imposed a 10% income tax on dividends in excess of Rs.10 lakh annually. 

2017: Relief for Rs.2.5 lakh-5 lakh tax slab

In a relief for taxpayers, the Rs.2.5 lakh- Rs.5 lakh income bracket saw a reduction in the tax rate from 10% to 5%. Additionally, Jaitley reduced the tax rebate under Section 87A to Rs.2,500. Furthermore, a 10% surcharge was introduced on individuals having a taxable income between Rs.50 lakh and Rs.1 crore. 

2018: Introduction of Health and Education Cess

In Arun Jaitley’s last budget of his life, he took the big decision of taxing long-term capital gains exceeding Rs.1 lakh at 10% rate without allowing the benefit of indexation. The government proposed to replace the 3% education cess with a 4% Health and Education Cess. The other important declaration was the increase in the deduction for interest income earned on deposits with banks and post offices.  

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2019: The year of two budgets 

As the Lok Sabha polls were due in May, an interim budget was presented. This was the first budget of Piyush Goyal, who had taken charge of Finance due to the ill-health of Jaitley. He made a massive change by announcing that those earning less than Rs.5 lakh would end up paying zero tax. For the salaried class, the standard deduction was increased to Rs.50,000. While presenting the first budget of the re-elected NDA government in July, Sitharaman did not make any changes in the income tax slab and rates.  

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