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These tax comparison numbers under Manmohan and Modi are Misleading

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An image has been shared by the ‘Nation with Namo’ page on the Facebook saying that under the Economist Prime Minister (Manmohan Singh) the income limit for tax exemption is very less when compared to the income limit for tax exemption under the Reformist Prime Minister (Narendra Modi).  Let’s try to analyze the claims made in the post.

Claim: In 2004, under the Manmohan government, there was no tax on income upto Rs. 50,000. In 2019, under the Modi government, there is no tax on income upto Rs. 5,00,000.

Fact: There was no tax on income upto Rs. 50,000 in 2004 but that limit can be extended to Rs. 1,00,000 by taking tax rebate. When the tax is rebated there is no effective tax on the income, so there was no tax on the income upto Rs 1,00,000 in 2004. In 2019, Rs. 5,00,000 tax exemption limit is after considering the tax rebate. Without the tax rebate, the actual income limit for no income tax is just Rs. 2,50,000 (in 2019). So the claim is MISLEADING.

Even though the numbers posted are true, they are compared in a misleading way. The figures in the first year of the Manmohan Singh government are compared with the figures in the last year of the Modi government. Also, the effects of inflation and economic growth rate were not considered while comparing the tax exemption limits. Actually, the income limit for no tax in the last year of Manmohan government was Rs. 2,00,000 (without tax rebate). The same was Rs. 2,50,000 (without tax rebate) under the Modi government in 2019.

Finally, the numbers shown in the post are misleading. In the post, the limit under the Manmohan government is taken without tax rebate and the first year of the government is considered whereas the limit under the Modi government is taken with tax rebate and the last year of the government is considered.

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