9 Years Of PM Modi: Major Changes In Income Tax Regime Under PM Modi Govt

This year 2023, among the major announcements made by the finance minister, the most important one was the extension of rebate for annual income up to Rs 7 lakh, applicable to people under the new income tax regime.

New Delhi: Ever since the BJP government, under the leadership of Prime Minister Narendra Modi, first came to power in 2014, several changes have been made in the Income Tax regime during the last nine years. In the first year of PM Modi’s government the date of the presentation of Budget was changed from the last working day of February to February 1. In 2019, the government decided to ditch the British-era style of bringing Budget papers in a briefcase and introduced the Parliament with our very own ‘bahi-khata’ (ledger) wrapped inside a ‘desi’ red cloth. The following year, however, this traditional book of accounts gave way for a more modern device and ever since the Finance Minister Nirmala Sitharaman has been presenting the Budget in paperless format by using a made-in-India tablet.

Major Changes In Income Tax Regime Under PM Modi

• The first Budget under PM Modi government was presented by Late Finance Minister Arun Jaitley. During budget 2014,  personal income tax exemption limit was raised 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.
• In his second budget in 2015, the Modi government increased the deduction limit on health insurance premium from Rs. 15,000 to Rs. 25,000 and for senior citizens it was increased to Rs. 30,000 from Rs. 20,000. Surcharge for income above Rs. 1 crore was increased to 12% from 10%. At the same time, wealth tax was abolished.
• Budget 2016 brought more bad news for the HNI taxpayers (having income above Rs 1 crore) as surcharge was further hike from 12 per cent to 15 per cent. For small and marginal taxpayers with income below Rs 5 lakh, tax rebate was hiked from Rs 2,000 to Rs 5,000.
• In Budget 2017, tax rate for income between Rs 2.5 lakh and Rs 5 lakh was reduced from 10 per cent to 5 per cent. The budget also levied a surcharge of 10 per cent on individuals having income between Rs 50 lakh and Rs 1 crore.
• In 2018, the fifth budget of the Narendra Modi government was a 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. The major move during this budget was the finance minister’s decision to tax long term capital gains exceeding Rs. 1 lakh at the rate of 10% without allowing the benefit of any indexation.
• In 2019, the then acting finance minister Piyush Goyal presented his first budget, an interim one, in February. In an election year, the interim budget brought good news for the middle-class. Those earning less than Rs. 5 lakh would end up paying zero tax.
• Later on in July, after the Modi 2.0 government was sworn-in, Nirmala Sitharaman presented the full budget but did not make any changes in the income tax slab and rates.
• In 2020, Sitharaman delivered the longest Budget speech in the history at 160 minutes. The government introduced new slabs and reduced the tax rate for different slabs for an individual income of up to Rs 15 lakh per annum, if a taxpayer opts for foregoing exemptions and deductions.
• The new tax regime will be optional and the taxpayers will be given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions, she said in the Lok Sabha while unveiling the Budget 2020-21.
• In 2021, Sitharaman did not announce any change in income tax slabs for individuals taxpayers but made some changes in the rules for income tax in her budget to help ease the compliance for taxpayers. These include unit-linked insurance policies (ULIP), 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.
• In the Union Budget 2022, the one with the shortest speech, FM Nirmala Sitharaman did not have much to offer to the common man or middle class. There  were no change in personal income tax slabs or rates. Therefore, an individual taxpayer continued to be charged one the same tax rates as before, depending on the tax regime that he/she choses for FY 2022-23, which commenced from from April 1, 2022.
• This year 2023, among the major announcements made by the finance minister, the most important one was the extension of rebate for annual income up to Rs 7 lakh, applicable to people under the new income tax regime.
• In addition, a standard deduction of Rs 50,000 has also been introduced under the new income tax slab. This means, a salaried taxpayer would be eligible for an upfront deduction of Rs 50,000 from the total taxable income under the new income tax regime as well — earlier, this deduction was only available under the old structure.