Finance Minister Nirmala Sitharaman on Thursday countered Aam Aadmi Party (AAP) MP Raghav Chadha's criticism of the Union Budget 2024-25, dismissing his claim that the middle class is excessively taxed. During her response in the Rajya Sabha, Sitharaman clarified how marginal relief significantly reduces the tax liability for individuals earning slightly above Rs 12 lakh per year.
FM Sitharaman Calls Out Chadha's "Misleading" Tax Statement
Rejecting Chadha's assertion that those earning beyond Rs 12 lakh are taxed on every additional rupee without relief, the finance minister explained the impact of marginal relief.
"Raghav Chadha shouldn't mislead the House by saying that a person will have to pay income tax on every rupee beyond Rs 12 lakh. That is incorrect," Sitharaman said. She then outlined how taxpayers benefit under the marginal relief provision introduced in the budget.
For instance, if a taxpayer earns Rs 12.1 lakh, the tax liability without marginal relief would have been Rs 61,500. However, with marginal relief applied, the actual tax payable is just Rs 10,000. Similarly, for an income of Rs 12.5 lakh, the tax would have been Rs 67,500 without relief, but with the provision, it reduces to Rs 50,000. Sitharaman clarified that only when an individual's salary reaches Rs 12.75 lakh, does the tax liability become Rs 71,250, with or without marginal relief.
Raghav Chadha's Allegations on Middle-Class Taxation
Earlier in Parliament, Raghav Chadha had criticized the government's handling of middle-class taxation, arguing that while the poor receive subsidies and the rich benefit from loan waivers, the middle class is left without significant financial relief.
"The middle class is like a hen that lays golden eggs, yet it is squeezed at every opportunity. Rising GST rates, stagnant wages, and increasing financial pressures are crushing their aspirations," Chadha said. He highlighted the burden of taxes on education, healthcare, housing, and essential goods, urging the government to introduce more middle-class-friendly policies.
Government's Stand on Middle-Class Taxation
Sitharaman, however, defended the budget provisions, emphasizing that the new tax regime offers zero tax liability for those earning up to Rs 12 lakh, while marginal relief prevents sudden tax jumps for those earning slightly above that threshold.
The debate over middle-class taxation remains a contentious issue, with opposition leaders pushing for lower GST rates and additional tax deductions, while the government maintains that recent reforms have eased the tax burden.
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