New Delhi, July 04: Prime Minister Narendra Modi will present the full Union budget 2019 and there's a lot of excitement brewing among citizens. The newly appointed Finance Minister Nirmala Sitharaman is all set to announce her maiden union budget today. This would be the first budget under Modi government's second term.
Interim Budget presented by the then FM Piyush Goyal in February announced a big income tax relief for the common man, the middle-class is looking at FM Nirmala Sitharaman to take this a step further. However, it is unlikely there is any major changes in the income tax slabs as the Modi Government had already announced several tax relief measures for the individual taxpayers.
During the first term of the Narendra Modi government, the then finance minister Arun Jaitley announced a slew of income tax changes for the salaried class in the Union Budget from 2014 to 2018.
Let us now look at how previous budgets provided tax relief to the common man:
Budget 2014 made a lot of taxpayers happy. In his first ever budget (July 2014), the then finance minister Arun Jaitley presented maiden budget of the Narendra Modi government, he gave major tax relief to the middle class by increasing the exemption limit from Rs 2 lakh to Rs 2.5 lakh. The income tax exemption limit for senior citizen was also raised from Rs 2.5 lakh to Rs 3 lakh.
Later in 2015, during the government's second budget, deduction limit on health insurance premium was increased from Rs 15,000 to Rs 25,000. For senior citizens, it was increased to Rs 30,000 from Rs 20,000. The exemption on transport allowance was also increased from Rs 800 to Rs 1,600. An additional deduction of Rs 50,000 for National Pension Scheme (NPS) was also announced in the Union Budget 2015.
This year there were number of budgetary positives for the common man. There was an increase in the tax rebate under Section 87A to Rs 5,000 from Rs 2,000 for people whose earned Rs 5 lakh or less. Jaitley also made some deduction limit on house rent which was also increased from Rs 2,000 per month to Rs 5,000 per month. The most significant feature of that budget was the step to give taxpayers a chance to correct past non-compliances through the Income Declaration Scheme, 2016.
In the Budget 2017-18, Jaitley reduced tax rate on Rs 2.5 lakh - Rs 5 lakh slab from 10 per cent to 5 per cent. The income tax on those earning annual income up to Rs 3.5 Lakh was reduced to Rs 2,500 from Rs 5,000. Jaitley also imposed a new surcharge on the rich - individuals/HUF with a total income between Rs 50 lakh and Rs 1 crore were now required to pay a 10% surcharge. He justified the new surcharge with the argument that resources in a country that's largely non-tax compliant would have to come from the better-off.
In the Budget that would turn out to be his last, Jaitley announced to increase the deduction on income from interest on bank and post office deposits from Rs 10,000 to Rs 50,000 for senior citizens.
An exemption from deduction for tax on interest income up to Rs 50,000 was also announced. The Modi government also promised to replace the 3 per cent education cess on personal income and corporation taxes with a 4 per cent 'Health and Education Cess'.
Interim Budget 2019:
Due to health reasons, Arun Jaitley could not present the vote on account and Union Minister Piyush Goyal was given the responsibility to present the last budget. The acting finance minister announced full tax rebate for those earning up to Rs 5 lakh per annum. Standard deduction for salaried class was also raised to Rs 50,000 from Rs 40,000.