A heated debate unfolded in the Rajya Sabha after Aam Aadmi Party (AAP) MP Raghav Chadha criticized the Union Budget 2024-25, claiming that middle-class taxpayers bear an excessive burden. Union Finance Minister Nirmala Sitharaman strongly refuted his claims, clarifying that marginal relief significantly reduces tax liability for individuals earning slightly above ₹12 lakh per year.
Sitharaman Labels Chadha’s Statement “Misleading”
Dismissing Chadha’s assertion that every rupee earned beyond ₹12 lakh is taxed without relief, Sitharaman accused him of misleading Parliament. She stated:
“Raghav Chadha shouldn’t mislead the House by saying that a person will have to pay income tax on every rupee beyond ₹12 lakh. That is incorrect.”
She further elaborated on the impact of marginal relief, citing specific examples. Under the provision, a person earning ₹12.1 lakh would face a tax liability of ₹10,000 instead of ₹61,500. Similarly, an income of ₹12.5 lakh, which would have attracted ₹67,500 in taxes, is reduced to ₹50,000 after applying the relief. She clarified that tax liability increases significantly only beyond ₹12.75 lakh.
Chadha’s Criticism of Middle-Class Taxation
Earlier, Chadha had expressed concerns over what he described as the unfair treatment of the middle class in taxation policies. He argued:
“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.”
He highlighted the burden of taxes on essential services such as education, housing, and healthcare, urging the government to introduce more supportive policies for middle-income groups.
Chadha pointed out that while the government claims to provide tax relief, the rising costs of living and additional indirect taxes like GST on daily essentials continue to erode the financial stability of middle-class families. He argued that despite recent tax reforms, the majority of salaried individuals still struggle with high deductions and limited savings opportunities.
Sitharaman Defends Tax Reforms
In response, Sitharaman defended the budget, emphasizing that under the new tax regime, individuals earning up to ₹12 lakh have zero tax liability, while marginal relief prevents sudden tax spikes for those earning slightly more.
She pointed out that the government has taken multiple steps to reduce tax burdens on individuals, including increasing the basic exemption limit and introducing tax slabs that encourage savings and investment. Additionally, she stated that recent budgetary provisions aim to provide tax relief for start-ups, small businesses, and senior citizens, ensuring a balanced approach to taxation.
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The debate over middle-class taxation remains a contentious issue, with opposition parties advocating for lower GST rates and additional tax deductions, while the government insists that recent reforms have reduced the financial strain.
Chadha Accuses Sitharaman of Twisting His Words
On Friday, Chadha accused Sitharaman of deliberately complicating his statements in the Rajya Sabha. He stated:
“Yesterday, the Union Finance Minister Nirmala Sitharaman in the Rajya Sabha said I tried to mislead the House. I was not even allowed to respond to her questions.”
He further alleged that she ignored other key concerns he raised, including issues faced by railway passengers, the economic struggles of the middle class, tariffs imposed by the Donald Trump administration, and the depreciation of the rupee.
“I raised various issues in my speech on the Union Budget like the issues being faced by railway passengers, financial challenges of the middle class, tariffs imposed by the Donald Trump administration or the falling rupee. She did not reply on these issues but on my example to explain the Income Tax rebate, she made a lot of statements.”
Chadha insisted that his primary concern was the growing financial distress of middle-income groups, particularly regarding the increased cost of essential services, rising fuel prices, and the lack of substantial relief in the tax structure.
Personal Jibes Add to the Debate
Chadha also claimed that Sitharaman had made personal attacks on him. In a video statement, he said:
“I want to say that I have a lot of love and respect for the Honourable Finance Minister. She is older than me in terms of experience and age. I hope that in future she refrains from making such personal statements.”
His remarks came in response to Sitharaman’s statement in the Rajya Sabha, where she questioned whether he truly possessed the expertise of a chartered accountant. She had remarked:
“It makes me question if I am really right in thinking that you are a chartered accountant.”
Chadha later shared a video of his response on social media, continuing the war of words outside Parliament. His supporters rallied behind him, while BJP leaders defended Sitharaman, stating that her comments were based on Chadha’s alleged misinterpretation of tax policies.
The Larger Debate: Are Tax Policies Favoring the Middle Class?
The exchange between Sitharaman and Chadha underscores a larger debate about the effectiveness of India’s tax policies in addressing middle-class concerns. While the government claims that reforms have lightened the tax burden, opposition parties argue that economic realities tell a different story.
Key issues that remain unresolved include:
- The impact of GST on household expenses.
- Rising costs of essential services such as education, healthcare, and public transport.
- The need for a more progressive tax system that ensures equitable wealth distribution.
- The effect of global economic policies, such as US-imposed tariffs, on India’s economy and its middle-class population.
What’s Your Take?
Do you think Raghav Chadha’s concerns about middle-class taxation are valid, or is the government’s approach justified? Share your thoughts in the comments below!