Income Tax Slabs since Independence | Fusion - WeRIndia

Do you know that the income tax rate was 97.5 per cent once in the country?

The Finance Minister Nirmala Sitharaman will present the Union Budget on February 1.

Income tax rates and tax slabs are the most concerned subject in the budget.

In this context, here are a few important facts on income tax slabs and rates in the country since Independence:

• The first income tax slab revision was done by John Mathai in 1949-50. He tried to reduce the tax on the income of up to ₹10,000 by a quarter of anna.
• In the 1950s, the maximum rate of income tax was reduced from 5 annas to 4 annas. The wealth tax was introduced.
• In the 1960s, the maximum marginal rate on unearned income was slashed from 88.25 per cent to 81.25 per cent. And on earned income, it was reduced from 82.5 per cent to 74.75 per cent.
• In 1971-72, during the tenure of Yashwantrao Balwantrao Chavan as the finance minister, there were 12 income tax slab rates. Those who earn ₹200,000 had to pay income tax at the rate of 85 per cent at that time.
• 1973-74, there were eleven tax slabs with the highest marginal effective rate of 97.75 per cent. In the next year, the maximum marginal rate was reduced to 75 per cent by the finance minister.
• It was V.P. Singh who reduced the number of tax slabs to four during 1985-87. The highest marginal rate was also slashed to 50 per cent.
• Manmohan Singh reduced the IT slabs to three – 20, 30 and 40 per cent during 1991-96.
• P Chidambaram reduced the highest rate of income tax to 30 per cent in 1997-98. His budget was lauded as ‘Dream Budget’.
• The basic exemption limit and standard deduction was raised to ₹50,000 and ₹25,000 in 1998-99.
• All surcharges were abolished except the surcharge for National Calamity Fund in 2001-02. It was kept at 2 per cent.
• In 2002-03, there were only two IT slabs, 20 per cent up to 4 lakhs and 30 per cent on income above ₹4 lakhs.
• The basic exemption limit was raised to ₹110,00 from ₹50,000 in 2007-08 and to ₹160,000 in 2009-10.
• It was further raised to ₹200,00 and ₹250,000 in 2012-13 and 2014-15.
• In 2017-18, the lowest tax slab was reduced to 5 per cent from 10 per cent. The current slab rates are 5 per cent, 20 per cent and 30 per cent.

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