In less than a month, the country’s general budget will be presented. The budget session will begin on January 31 and be presented by Finance Minister Nirmala Sitharaman on February 1. This time around, it’s anticipated that the government will raise the ceiling on income tax exemptions in the upcoming budget. The custom of establishing an income tax slab dates back to India’s very first budget after gaining independence. You might be astonished to learn that only income up to Rs. 1,500 was tax-free in India’s first general budget.
At present, income up to Rs 2.50 lakh is tax-free. Income tax has to be paid on annual income above this. The income tax limit was last changed in 2014 when it was upgraded from Rs 2 lakh to Rs 2.50 lakh. No change has been made in the last 9 years.
The first budget of independent India was presented by RK Shanmukham Chetty, the first Finance Minister of India on November 26, 1947. The budget for 1949–50 introduced the first set of income tax rates. Up to Rs 1,500 in annual income was then exempt from income tax. The budget included a 4.69 percent income tax on incomes between Rs 1,501 and Rs 5,000 per year, while income between Rs 5,001 and Rs 10,000 was subject to a 10.94% tax.
A person had to pay income tax at a rate of 21.88 percent if his income was between Rs 10,001 and Rs 15,000. The income tax rate at the time was 31.25 percent for anybody making over Rs 15,001. Following this, the tax slab rates keep changing on an annual basis.
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