New Delhi, February 1 Announcing the new tax slab, Union Finance Minister Nirmala Sitharaman said that now no tax will have to be paid on income up to Rs 12 lakh. There have been many changes in the tax slab for the middle class in independent India. This story of change started from 1949-50, when a tax of 1 anna was imposed on 10 thousand.
For the first time in 1949-50, John Mathai was the Finance Minister. During his tenure, the tax slab was reduced, then a tax of 1 anna was imposed on an annual income of Rs 10,000. In this way, it was reduced by one fourth. After this, the tax on the second slab of income of more than 10,000 was reduced from 2 anna to 1.9 anna.
Then the change was made after years. In the financial budget 1974-75, Finance Minister Yashwantrao Chavan reduced the upper limit of income tax from 97.75 percent to 75 percent. Those earning Rs 6,000 per annum were exempted. The surcharge limit was reduced to 10 percent for all categories.
In 1985-86, V.P. Singh became the Finance Minister. He reduced the number of tax slabs, which was earlier 8, to 4. A 50 percent tax was imposed on income above Rs 1 lakh. The maximum marginal tax rate was reduced from 61.875 percent to 50 percent.
In 1992-93, Manmohan Singh divided the tax slab into three parts. 20 percent tax was fixed on 30-50 thousand, 30 percent on 50 thousand-1 lakh and 40 percent tax above 1 lakh. The foundation of the current tax structure was laid in this budget.
Whereas, in 1994-95, the first slab was kept at 20% for income of 35-60 thousand. 30% tax was fixed on 60 thousand-1.2 lakh and 40% tax was fixed on more than 1.2 lakh. The interesting thing is that there was no change in the tax rates, just the slab was improved.
In 1997-98, P. Chidambaram’s ‘Dream Budget’ brought a big cut in tax rates. 10% tax was imposed on 40-60 thousand rupees, 20% on 60 thousand-1.5 lakh and 30% tax was imposed on more than that. This gave relief to the taxpayers. After this, in 2005-06, income up to 1 lakh rupees was made completely tax free. 10% tax was kept on 1-1.5 lakh, 20% on 1.5-2.5 lakh and 30% on more than that. This was considered a big relief for the employed middle class.
In 2010-11, Pranab Mukherjee made income up to Rs 1.6 lakh tax free. 10 percent tax was fixed on 1.6-5 lakh, 20 percent on 5-8 lakh and 30 percent tax above 8 lakh. Experts described this new structure as more systematic.
In 2012-13, the tax exemption limit was increased to Rs 2 lakh. 10 percent tax was fixed on 2-5 lakh, 20 percent on 5-10 lakh and 30 percent tax above 10 lakh.
In 2017-18, the Finance Minister of the NDA government, Arun Jaitley, made changes in Section 87A and gave a rebate of up to Rs 2,500 to those with an income of up to three and a half lakhs. He reduced the tax on income of 2.5-5 lakhs from 10 percent to 5 percent.
In 2020-21, the ‘New Tax Regime’ was presented to the country. The tax slab was made easier. Many exemptions were abolished and relief was given on income up to Rs 5 lakh. This new system was more simple and clear for taxpayers.
New tax slabs were announced in the budget for 2025-26. It was said that now income up to Rs 12.75 lakh has been made tax free. This also includes standard tax deduction. After this big change in the tax slab, there has been zero tax from 0 to 12 lakh, but if the income is Rs 13 lakh, then income up to Rs 16 lakh will come under the tax slab of 15 percent.
According to this, 5 percent tax will have to be paid on up to Rs 4-8 lakh, 10 percent on up to Rs 8-10 lakh, 15 percent on 12-16 lakh, 20 percent on 16-20 lakh, 25 percent on 20-24 lakh and 30 percent on income above 24 lakh.
