'Don't mislead the House': FM Sitharaman counters Raghav Chadha on tax relief on Rs 12+ lakh income

Finance Minister Nirmala Sitharaman on Thursday countered Aam Aadmi Party MP Raghav Chadha’s criticism of the Union Budget, calling out his claim about middle-class tax burdens. During her response in Rajya Sabha, Sitharaman clarified how marginal relief significantly reduces the tax burden for those earning slightly above ₹12 lakh.

"Raghav Chadha shouldn't mislead the House by saying that a person will have to pay income tax entirely on every rupee beyond ₹12 lakh salary. No, it is not so," the finance minister said. Explaining the marginal relief provision, she provided specific examples to highlight how taxpayers benefit.

"Suppose a person earns ₹12.1 lakh. The tax without marginal relief would have been ₹61,500, but with marginal relief given in the budget, the taxpayer pays only ₹10,000. If the taxpayer earns ₹12.5 lakh, the tax without marginal relief would have been ₹67,500, but with marginal relief, the tax will be only ₹50,000. It is only when the taxpayer's income reaches ₹12.75 lakh that the tax becomes ₹71,250, with or without marginal relief," Sitharaman explained.

Her response came after Chadha’s speech in Parliament, where he accused the government of neglecting the middle class. "The poor receive subsidies, the rich have their debts forgiven, but the middle class gets nothing," Chadha said, calling the middle class "a hen that lays golden eggs" but is "repeatedly squeezed" by rising taxes.

"There is no doubt that a taxable income of 12 lakh rupees results in zero tax. But this exemption is not that straightforward. If you earn even slightly above 12 lakh--for instance, 12.10 lakh rupees--you have to pay tax as per the designated slab," the AAP MP claimed.

Chadha also argued that rising GST rates and stagnant salaries are reducing the middle class’s spending capacity. He highlighted the financial pressures faced by middle-class families, from education loans to long-term housing debt, and criticised the lack of government schemes or tax relief tailored for them. "The middle class is forced to pay tax on everything—books, medicines, clothes, housing. Their aspirations are crushed under the weight of these taxes," Chadha said.