Arun Jaitley presented each of the full-year general budgets of Modi's first term before unforeseen circumstances left him unable to present the last one — the February interim budget that was eventually helmed by makeshift FM Piyush Goyal.The budgets Jaitley presented shared a common theme — they taxed the rich to hand sops to the middle class.A statement he made in 2017 came to be the defining aspect of all his budgets: "In a non-tax compliant society, the state needs resources and the resources will have to come from the more affluent as far as the tax structure is concerned. There is a social equity behind this."First of the Jaitley yearsIn his first budget (July 2014), Jaitley raised the minimum basic tax exemption limit from Rs 2 lakh to Rs 2.5 lakh — a major respite for the middle-class taxpayer buffeted by high inflation during the Manmohan era. For senior citizens, the limit was increased to Rs 3 lakh from Rs 2.5 lakh earlier.The Section 80(C) limit for individuals was raised to Rs 1.5 lakh from Rs 1.1 lakh, a significant relief for the small investor. On the home loan front, the interest on the loan amount permitted to be deducted from total income was raised to Rs 2 lakh from Rs 1.5 lakh. It gave home loan seekers a sizeable breathing space.Other than these changes, Jaitley tweaked an income tax rule to prevent people from turning black money into white — proposing to tax the advance/earnest money received for the sale of a capital asset, even in cases of forfeiture in failed deals. Before this tax, people were allegedly using this payment as a way of regularising black money.His first full-year budgetJaitley gave a serious jolt to the rich in his first full-year budget (2015-16) by substituting the wealth tax with an additional 2% surcharge. Though the basic exemption limit and tax rates for individuals/HUF were kept static, he proposed a hike in the surcharge from 10% to 12% on taxable income above Rs 1 crore for individuals/HUF.In this budget, Jaitley gave a host of substantial benefits to the common taxpayer. The exemption for transport allowance was raised from Rs 800 per month to Rs 1,600. In a move to boost the National Pension Scheme, up to Rs 50,000 of additional deduction was allowed on the employee’s contribution. The limit for treatment of specified diseases by very senior citizens was increased from Rs 60,000 to Rs 80,000.Jaitley raised the surcharge on the super rich again in Budget 2016-17. While tax rates and basic exemption limits were kept at the same level, he propsoed to increase the surcharge from 12% to 15% for individual/HUF having a taxable income above Rs 10,000,000, taking the effective tax rate for such individuals to 35.54%.Budget 2016-172016-17 saw a number of budgetary positives for the common man. There was a Rs 60,000 raise in the limit of deduction on the rent paid by people without a house of their own who were not given any house rent allowance by employer. To reduce the burden on those who earned Rs 5 lakh or less, Jaitley upped the ceiling of rebate under Section 87A to Rs 5,000 from Rs 2,000.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. The scheme, effective from 1 June 2016, provided a four-month compliance window to avoid prosecution by paying 30% tax plus 15% penalty. Jaitley announced that those caught with unaccounted-for wealth would have to shell out 90% in tax-plus-penalty and also face up to seven years in prison in case they failed to declare it inside that four-month period.Budget 2017-18In the Budget 2017-18, Jaitley 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.The basic exemption limits for individuals/HUFs stayed the same. Lower middle class taxpayers were given relief by bringing down the tax rate for earning between Rs 250,000 and Rs 500,000 from 10% to 5%.Jaitley's last budgetIn the 2018-19 Budget, the return of the standard deduction — done away with in 2005 — was the most noteworthy change in the direct tax regime. In the Budget that would turn out to be his last, Jaitley proposed a standard deduction up to Rs 40,000 from salary income in lieu of medical reimbursement and transport allowance. Till the, reimbursement of medical expenses up to Rs 15,000 was not taxable and transport allowance up to Rs 19,200 was exempt.An ET story sums up the math involved in standard deduction: "It allows for a flat deduction from salary income, to make up for some of the expenses which an employee would typically incur in relation to his employment. Before it was abolished, it had allowed a salaried employee to claim a flat deduction from salary income of Rs 30,000 or 40% of salary (if salary did not exceed Rs 5 lakhs), or a deduction of Rs 20,000 (if salary exceeded Rs 5 lakh). Before every budget, employees hoped standard deduction would be brought back."
From our friends over at the : Economic Times
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