By FnF Desk | PUBLISHED: 20, Jan 2021, 12:11 pm IST | UPDATED: 22, Jan 2021, 12:42 pm IST
India's first Budget was presented on February 18, 1860, by James Wilson. R K Shanmukham Chetty, the first finance minister of independent India presented the Union Budget on November 26, 1947. In 2001, the then finance minister Yashwant Sinha broke the colonial practice of presenting the Budget in the evening and started the tradition of reading it out from 11 am.
Indira Gandhi became the first woman finance minister to present India's Budget in Parliament in 1970. Nirmala Sitharaman, who was appointed as the finance and corporate affairs minister on May 31, 2019, is the second woman to have presented the Budget on July 5, 2019.
Since India gained independence in 1947, the country has been making great strides towards achieving economic autonomy, thanks to liberalization and visionary policymaking. Over the course of more than 70 years, the country has left its colonial past to create a new identity of being an economic powerhouse.
One of the chief architects behind this inspiring story of progress is the Union Budgets, which provide the required framework for the government to introduce policies and reforms for the betterment of the common taxpayers. Here is a brief insight into the history of Union Budgets in India – how it started and milestone decisions that have been made throughout the journey.
Union Budget 1947-48
Finance minister RK Shanmukham Chetty presented the first budget of Independent India. Total expenditure under the budget was earmarked at Rs 197.39 crore, out of which approximately Rs 92.74 crore (or 46 percent) was allocated for Defence Services.
Union Budget 1948-49
For the first time, Finance minister R.K. Shanmukham Chetty used the term “Interim Budget.” The Interim Budget later became an institutional process, for each year the General Elections are held. Primarily, an Interim budget denotes a short-term budget, which is presented just before the Lok Sabha elections are held.
Union Budget 1949-50
Under this budget, the government decided to abolish the Capital Gains Tax. The Capital Gains Tax was later; however, reinstated under the budget 1956-57 and continues to serve as an entity closely monitored by the income tax authorities to prevent any tax evasion
Union Budget 1950-51
In the budget of 1950-53, the government formally announced the initiation of the Planning Commission, which is the primary body, headed by the Prime Minister, and entrusted with the responsibility of directing a well-defined program for the country’s development.
Union Budget 1951-52
Under this budget, the government proceeded to double the surcharge (up to 100 percent) on the widely consumed ale, spirits, beer, and other fermented liquor.
Union Budget 1953-54
The government raised the minimum income tax exemption limit for individual taxpayers, by approximately 17 percent or up to Rs 4,200. The minimum tax exemption limit before was up to Rs 3,600 earlier.
Union Budget 1955-56
In this budget, the government proposed the idea of having different tax-exemption limits for married and unmarried individuals. The move was part of the initiative to create a suitable scheme of family allowances.
Union Budget 1957-58
The government introduced the Wealth Tax in this budget, a new direct taxation instrument that continued to exist for the next six decades.
Union Budget 1958-59
For the first time in the history of Independent India, the budget was presented by a Prime Minister. Then Prime Minister Jawaharlal Nehru decided to carry out the responsibilities of presenting the budget and took the opportunity to introduce a new taxation instrument, called the Gift Tax.
Union Budget 1960-61
This budget served as grounds of controversy when the government gave out estimates of the PL480, which was an import agreement with the USA. Signed in 1959, the deal saw the Indian government join hands with the United States Administration to import food grains and other agricultural commodities, valued at Rs 122 crores at that time. The decision later snowballed into controversy and received a considerable amount of backlash from the people, only to become a part of India’s political lexicon, in the years to come.
Union Budget 1962-63
In this budget, the government raised the income tax rates substantially, much to the annoyance of the ordinary taxpayers. The income tax rate was increased to 72.5 percent, excluding surcharge, to become the highest ever till date.
Union Budget 1963-64
The government received widespread criticism from across industries for introducing a super-profits tax, which was an additional tax levied on the corporates and wealthier individuals in India, over and above the normal income-tax.
Union Budget 1964-65
In this budget, the Expenditure Tax was introduced. This was a direct taxation tool levied on all expenditures above Rs 36,000 per annum. The new Expenditure Tax was later abolished under the budget of 1966-67, after facing tremendous backlash from corporates.
Union Budget 1965-66
Under this budget, the government introduced the Voluntary Disclosure Scheme of unaccounted wealth. The scheme was the government’s first-ever initiative to deal with black money and tax evaders. With the introduction of this scheme, taxpayers now had a window to deposit undisclosed cash with the RBI.
Union Budget 1968-69
Earlier, taxpayers misused a particular tax instrument, known as the “Spouse Allowance,” which allowed both husband and wife (who had taxable incomes) to avail tax exemptions. In the union budget 1968-69; however, this unusual instrument was abolished by the government.
Union Budget 1970-71
This was the only budget in the history of Independent India, which was presented by a woman (before Nirmala Sitharaman presented the Union Budget 2019-20.) Indira Gandhi, who was the then Prime Minister of the country, took the additional mantle of Finance Minister to present this historic budget.
Union Budget 1971-72
Under this budget, the government introduced a new tax regime, which levied an additional tax rate of 20 percent on all flight tickets purchased in rupees. On the other hand, the tickets paid for in foreign exchange were exempt from this tax. This instrument looked to put a clamp on cash deals that had a bearing on travelers.
Union Budget 1974-75
In this budget, the government looked to set the tone for the reformation of the income tax structure in India. Thus, the government decided to slash the maximum marginal rate of income-tax (including surcharge) to 75 percent, from 97.75 percent.
Union Budget 1978-79
This budget came within a month after the Janata Party government decided to control illegal transactions by deciding to scrap Rs 1,000, Rs 5,000 and Rs 10,000 notes, from January 16, 1978. The budget speech primarily focused on justifying this controversial decision.
Union Budget 1980-81
The government decided to introduce new steps to curb spending on non-essentials and aspirational lifestyle. As a result, an additional tax of 15 percent, over and above the existing taxes on food and drinks (both state and central levies), was imposed on the gross receipts of luxury hotels.
Union Budget 1981-82
The government introduced an import tax of 15 percent on the previously custom duty-exempt imported newsprint.
Union Budget 1982-83
Under this budget, the government proposed to exempt the unused earned leaves that salaried employees encashed on retirement. This decision provided relief to the everyday working-class taxpayers who were nearing retirement.
Union Budget - 1985-86
Finance minister VP Singh proposed to set up the Board for Financial and Industrial Reconstruction (BIFR). The budget; thus, laid down the foundations of the modern-day insolvency code. The motive behind establishing BIFR was to provide a speedy mechanism to amalgamate, merge, or devise other solutions to deal with underperforming units in the medium and large sector.
Union Budget 1986-87
The government announced a new tax, known as the Modified Value Added Tax (MODVAT), which evolved into the present-day Goods and Services Tax (GST). Under MODVAT, manufacturers were allowed to obtain immediate and complete reimbursement of the excise duty that they paid on the components and raw materials.
Union Budget 1988-89
The government introduced a new tax-saving initiative, known as the Kisan Vikas Patra, to mobilize untapped rural savings. This scheme was well-received by the masses as the deposit value almost doubled in after completion of five-and-a-half years.
Union Budget 1989-90
This year saw the government to introduce a new instrument, known as Equity Linked Savings Scheme or ELSS, to stimulate taxpayers to invest their savings into the stock markets.
Union Budget 1993-94
Under this budget, the government announced the setting up of the National Stock Exchange, which currently functions as India’s stock markets.
Union Budget 1994-95
In this budget, the then Finance Minister Manmohan Singh introduced significant reforms in the indirect tax structure in the country, in the form of Service Tax. Thus, the government levied a 5 percent tax on the telephone, non-life insurance, and stock-broking services.
Union Budget 1995-96
Under Manmohan Singh’s tenure as Finance Minister, the country also witnessed the establishment of an independent regulatory authority to oversee the working of the insurance sector. This eventually led to the setting up of the Insurance Regulatory Development Authority (IRDA) of India.
Union Budget 1997-98
Often dubbed as the “Dream Budget,” the budget of 1997-98 presented by P Chidambaram, saw several economic reforms introduced in India including lowering of income tax rates, removal of the corporate tax surcharges, and reduction of corporate tax rates. The budget also saw the introduction of the Voluntary Disclosure of Income Scheme (VDIS), under which taxpayers were allowed to disclose any hidden income, by paying 30 percent tax on the total value of the undeclared money.
Union Budget 1998-99
Presented by the then Finance minister Yashwant Sinha, this budget proposed two specific schemes to attract NRI investments in India. The first one was the Unit Trust of India’s (UTI) India Millennium Scheme, under which the subscription was to be made in dollars only and the money collected was invested in India-based schemes. The other one was the State Bank of India’s (SBI’s) Resurgent India Bonds, under which NRIs could invest in foreign currencies, and the collected funds were invested into infrastructure projects.
Union Budget 2000-01
In the first budget of the new millennium, the government introduced the Kargil Tax, which levied an additional 5 percent surcharge on salaried individuals with an annual income of more than Rs 1.5 lakh. The move was aimed to offset the cost of the Kargil War partly.
Union Budget 2001-02
In this budget, the government introduced the Transfer Pricing Regulations to plug tax evasion by companies.
Union Budget 2006-07
For the first time, the government introduced the Goods and Services Tax, in an attempt to systematically overhaul the tax structure by 2010. GST was eventually rolled out seven years after its initial launch date.
Union Budget 2009-10
The second UPA government announced the setting up of the Unique Identification Authority of India (UIDAI). The UIDAI subsequently launched the Aadhaar project to provide each Indian citizen with a unique identification number/card.
Union Budget 2013-14
In his last budget as Finance minister, P Chidambaram introduced a new taxation concept known as the “super-rich tax” for the individuals with more than Rs 1 crore of taxable income. Thus, these “Relatively prosperous" individuals had to pay an additional 10 percent of surcharge.
Finance Minister Nirmala Sitharaman’s path-breaking Union Budget of 2019-20, strives to take the country to newer heights of development with the introduction of several intuitive reforms such as more relaxed taxation norms, faceless e-assessment, and direct tax reforms.
Union Finance Minister Nirmala Sitharaman will present Union Budget 2021 on February 1 at 11 am. Notably, the Budget session of Parliament will begin from January 29 and will conclude on February 15. Before the start of the Budget session on January 29, President Ram Nath Kovind will address both houses of the Parliament. It is to be noted that the second part of the Budget session will be held from March 8 to April 8 after a brief break. The Centre wants to boost economic growth at all costs as COVID-19 pandemic has fuelled the economic crisis.There is no denying the fact that Sitharaman is facing an uphill task this year as she will present Union Budget 2021 after a contraction of the Indian economy.
In a year where the country hopes to recover from the coronavirus pandemic that ravaged almost every other sector, the onus will be on Sitharaman to bring much needed relief for people as well as sectors that need budgetary support to recover.