Nine years of Narendra Modi government: how income tax rules have changed during this period

After an overwhelming tenure in the Lok Sabha elections, the late Arun Jaitley presented his first Union budget where he raised the personal income tax exemption cap from 2,000,000 2.5 million. For senior citizens, the exemption ceiling has been increased from 2.5,000,000 to 3,000,000. The deduction limit under Section 80C has been increased to Rs1.5 lakh from 1 lakh while deduction limits for home loan interest were increased to 2,000,000 of 1.5 million.

-The ceiling for the deduction of health insurance premiums has increased from 15,000 to 25,000 for the general public

-The ceiling for the deduction of health insurance premiums has been increased to 30,000 from 20,000 for seniors.

-The transport allowance exemption has also been increased by 800 to 1,600 per month.

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

-Supplement for higher income 1 crore went from 10% to 12%.

– Wealth tax has been abolished

-An additional 2% surtax on the super-rich who had taxable income above 1 crore.

-The tax rebate has been increased by 2,000 to 5,000 for those whose income does not exceed 5 lakh per year under Section 87A.

-The deduction limit on rent paid under Section 80GG has also been increased by 24,000 per year for 60,000 per year.

-Supplement for higher income 1 crore has been increased to 15% from 12%.

-The budget also imposed a 10% income tax on dividends exceeding 10,000,000 per year.

-The tax rate has been reduced from 10% to 5% in the 2.5 million – Support of 5 lakh.

-The Minister of Finance also reduced the tax refund under Section 87A of 5,000 to 2,500, applicable to taxpayers whose annual income is up to 3.5 million.

-A 10% surcharge has been introduced for those whose annual taxable income is between 50 lakh and 1 crore.

-A standard deduction of 40,000 instead of the current exemption from transport allowance and reimbursement of miscellaneous medical expenses

-The deduction for medical expenses has been increased to 50,000 from 30,000 for seniors.

-The deduction for interest received on deposits with banks and post offices has been increased to 50,000 from 10,000 for seniors, with exemption from interest income tax deduction up to 50,000.

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

-In an election year, the interim budget brought good news for the middle class. Those who earn less than 5 lakh ended up paying no tax.

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

The government has introduced new slabs. The new tax regime was optional and taxpayers had the choice of remaining in the old regime with exemptions and deductions or opting for the new reduced tax rate without these exemptions.

New tax brackets were announced in the 2020 budget. Taxpayers had the choice of staying in the old regime with exemptions and deductions or opting for the new lower tax rate without these exemptions.

Zero income tax up to 2.5,000,000

5% for income between 2.5 lakh and up 5,000,000

10% for income between 5 lakh and up 7.5 million

15% for income between 7.5 lakh and up 10,000,000

20% for income between 10 lakh up to 12.5 million

25% for income between 12.5 lakh and up 15,000,000

30% for higher incomes 15,000,000.

-Dividends received from mutual funds and domestic companies should be taxed at the level of the beneficiary.

-If the employer’s contribution exceeds 7.5 lakh per annum towards NPS, superannuation fund and EPF, it will be taxable in the hands of the employee.

These include pre-populated income tax return (ITR) forms, higher withholding tax (TDS) for non-filers of tax returns, and exemption from paying dividends to the REIT /InvIT of TDS, among others.

There have been no changes to personal income tax brackets or rates. The government has provided a one-stop window to correct omissions in the income tax returns (ITRs) filed. The Minister of Finance announced a new tax rule for taxpayers according to which a taxpayer can file an updated declaration on the payment of taxes within two years after the end of the relevant tax year.

-30% tax on proceeds of virtual/digital assets.

-The tax deduction limit for state employees’ contribution to the NPS has been increased from 10% to 14%.

This year 2023, many changes have been made to the income tax rules starting from April 1, 2023. Changes in income tax brackets to increase the tax refund limit, the absence of The LTCG tax benefit on certain debt mutual funds are some of the key changes effective April 1, 2023.

-Extension of reimbursement for annual income up to 7 lakh, applicable to people under the new income tax regime.

-A standard deduction of 50,000 was also introduced as part of the new income tax slab.

Updated: May 26, 2023, 11:06 AM IST