The entire country is eagerly waiting for Budget 2024 wherein Union Finance and Corporate Affairs minister Nirmala Sitharaman to announce changes in income tax rates to reduce the tax outgo of masses. Changes in tax slabs is something that takes place once in a blue moon.
The last time these tax rates were changed was seven years ago i.e., in 2017-18. Since then, some miniscule changes have been carried out.
One such change was when a tax rebate of ₹12,500 was announced in 2019 which means the taxpayers with earnings up to ₹5 lakh do not have a tax liability.
It was during then Finance Minister Arun Jaitley’s tenure that the current slabs were introduced. The late Union finance minister had slashed the minimum tax rate from 10 percent to 5 percent for those earning between ₹2.5 lakh to 5 lakh.
He had also reduced the 87A rebate to ₹2,500 from ₹5,000 earlier (it now stands at ₹12,500). As a result of these two changes (tax slab and 87A rebate), tax liability of taxpayers up to ₹3 lakh became ‘nil’.
These are the tax rates which Nirmala Sitharaman’s predecessor introduced in 2017.
Budget 2019: In 2019, Finance Minister Nirmala Sitharaman raised the tax rebate under 87A to ₹12,500 from earlier cap of ₹2,500.
As a result of this rebate, taxpayers with income up to ₹5,00,000 would have to pay ‘nil’ tax with the entire tax of ₹12,500 (5% of 5,00,000 – 2,50,000) being set off against the rebate of the same amount.
Budget 2020: Three years later, Budget 2020 introduced a range of changes with the introduction of New Tax Regime which not only phased out most deductions and exemptions offered to the individual taxpayers, while slashing the tax rates for most income brackets.
These were the tax rates that were introduced as per the new tax regime:
Budget 2023: The Union Finance Minister Sitharaman announced that the new tax regime would be made the default tax regime. In other words, the new tax regime will be considered as the ‘default regime’ and to opt for the old regime, taxpayers will have to categorically opt out of the new tax regime.
