How income tax structure, slabs in budgets over last 4 assessment years changed during PM Modi regime

By: | Published: February 1, 2018 9:43 AM

Budget 2018: Finance Minster Arun Jaitley is going to present the last full Budget of the Modi government today and the common man – including taxpayers – are waiting with bated breath what is in store for them. According to tax experts, the Modi government has been able to excite the taxpayers right from its maiden Budget 2014 itself.

FM Arun Jaitley presents Union Budget 2018 today.Budget 2018: To compensate the revenue loss, a smart move was made by increasing the surcharge from 10% to 12% on the super rich.

Budget 2018: Finance Minster Arun Jaitley is going to present the last full Budget of the Modi government today and the common man – including taxpayers – are waiting with bated breath what is in store for them. According to tax experts, the Modi government has been able to excite the taxpayers right from its maiden Budget 2014 itself, when it tinkered with the basic tax exemption limit to allow additional Rs 50,000 tax-free income which left a long-lasting impact on ‘aam aadmi’.

Although tax slabs remained unchanged in the Budget 2015, but Jaitley did not fail to make the common man happy as he abolished wealth tax, increased the deduction for health insurance premium from Rs 15,000 to Rs 25,000 and also doubled the transport allowance exemption from Rs 800 to Rs 1,600. To compensate the revenue loss, a smart move was made by increasing the surcharge from 10% to 12% on the super rich.

Watch video: Brief history of Budget: 10 intewresting facts you shouldn’t miss

“The Budget 2016 did not witness any change in the tax slabs, but the Modi Sarkar lessened the burden on low income group by increasing the rebate u/s 87A from Rs 2,000 to Rs 5,000 and the super rich class again got a blow as the surcharge was increased to 15%. Offering a marginal relief to small taxpayers, FM Jaitley reduced the tax rate to 5% for the tax slab bracket of Rs 2.5 lakh to Rs 5 lakh in the Budget 2017 & additional surcharge was introduced @10% on income over Rs 50 lakh up to Rs 1 crore. Clearly, the Finance Minister has so far been successful in keeping a balance between the taxpayers’ expectations and government treasury, and now all eyes are on the Modi government’s last comprehensive Budget before general elections,” says Akhil Chandna, Director, Grant Thornton India LLP.

Here we are taking a look at how the income tax structure and slabs have changed during the Modi regime over the last four years:

Know how Arun Jaitley’s Budget 2018 will impact your tax liability with this Income Tax Calculator

Let’s look into the income tax slabs over the last four years:

I) For Individuals 59 years of the age and below

Tax Rates >

Years

NIL

5%

10%

20%

30%

Total tax before cess#

*Income in FY 2014-15

(AY 2015-16)

Up to Rs. 2,50,000

Rs. 2,50,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2015-16

(AY 2016-17)

Up to Rs. 2,50,000

Rs. 2,50,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2016-17

(AY 2017-18)

Up to Rs. 2,50,000

Rs. 2,50,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

Illustration 1

*Income of Rs. 7,00,000 in (AY 2017-18)

Tax amount=

Nil

(500000-250000)*10%= 25,000

(7,00,000-5,00,000)*20%=40,000

65,000

*Income in FY 2017-18

(AY 2018-19)

Up to Rs. 2,50,000

Rs. 2,50,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

Illustration2

*Income of  Rs. 7,00,000 in (AY 2018-19)

Tax amount=

Nil

(500000-250000)*5%= 12,500

(7,00,000-5,00,000)*20%=40,000

52,500

You may notice from the above Illustrations 1 & 2 that the tax liability of the person earning same income in assessment year 2017-18 and 2018-19 has come down drastically by Rs. 12,500 by the halving the tax rate from 10% to 5% for the part of income falling between Rs. 2,50,001 to Rs. 5,00,000.

* Income means the Net total taxable Income (NTTI) i.e Total Income less deductions

# Rebate under Section 87A is not applicable for these illustrations as the NTTI is not below Rs. 5,00,000

II) For Individuals of age above 60 years up to 79 years

Tax Rates >

Years

NIL

5%

10%

20%

30%

*Income in FY 2014-15

(AY 2015-16)

Up to Rs. 3,00,000

Rs. 3,00,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in

FY 2015-16

(AY 2016-17)

Up to Rs. 3,00,000

Rs. 3,00,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2016-17

(AY 2017-18)

Up to Rs. 3,00,000

Rs. 3,00,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2017-18

(AY 2018-19)

Up to Rs. 3,00,000

Rs. 3,00,001 to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

* Income means the Net total taxable Income (NTTI) i.e Total Income less deductions

III) For Individuals of age 80 years and above

Tax Rates >

Years

NIL

20%

30%

*Income in FY 2014-15

(AY 2015-16)

Up to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2015-16

(AY 2016-17)

Up to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2016-17

(AY 2017-18)

Up to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

*Income in FY 2017-18

(AY 2018-19)

Up to Rs. 5,00,000

Rs. 5,00,001 to Rs. 10,00,000

Rs. 10,00,001& above

* Income means the Net total taxable Income (NTTI) i.e Total Income less deductions

Surcharge is charged on those assessees whose Taxable Income exceeds a specified limit.

The rates are as follows over the last four years:

Years

Rate for *Income that of Rs. 50,00,001 and above

Rate for *Income that of Rs. 1,00,00,001 and above

FY 2014-15

(AY 2015-16)

10%

FY 2015-16

(AY 2016-17)

12%

FY 2016-17

(AY 2017-18)

15%

FY 2017-18

(AY 2018-19)

10%

15%

Insights here:

More number of taxpayers are brought under surcharge with this move of making surcharge applicable to the slab of *Income between Rs. 50,00,000 up to Rs. 1,00,00,000 from AY 2018-19.

* Income means the Net total taxable Income (NTTI) i.e Total Income less deductions

Tax Rebate is tax relief provided to all resident Individuals whose *Income arrived at is below a specified limit. This is a boon to many small taxpayers.

Tax Rebate is provided as deduction from the Normal tax amount calculated before cess equal to lower of the tax amount or the specified rebate.

Change in Tax Rebate has been as stated below:

  Years

*Income Up to Rs.

Tax Rebate

FY 2014-15

(AY 2015-16)

5,00,000

Rs. 2,000

FY 2015-16

(AY 2016-17)

5,00,000

Rs. 2,000

FY 2016-17

(AY 2017-18)

5,00,000

Rs. 5,000

FY 2017-18

(AY 2018-19)

3,50,000

Rs.2,500

* Income means the Net total taxable Income (NTTI) i.e Total Income less deductions

Insights :

Persons having Income above Rs. 3,50,000 can no longer enjoy the benefit of this tax rebate from AY 2018-19

Also, the tax rebate is halved from AY 2018-19 from earlier rebate of Rs. 5,000

Note: Cess: 3% on total of income tax + surcharge has not seen any change

(All the tax tables have been prepared by Archit Gupta, Founder and CEO, ClearTax.in)

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