High income tax doesn’t mean middle class is suppressed: FM

Finance Minister Nirmala Sitharaman on Thursday said high personal income tax collection does not necessarily mean that the middle class is being suppressed or crushed in the country, as there is no evidence of any suppression of the middle class in the country, but there is evidence of middle-class expansion.

“There is no evidence of middle-class suppression. Actually, there is enough and more evidence of historic middle-class expansion and formalisation driven by the economic reforms that have been undertaken in the last ten years. High personal income tax collection is not necessarily the middle class being crushed,” Sitharaman said while replying to a debate on the Union Budget 2026-27.

Replying to the allegation by the Opposition that the middle class is being sandwiched between the rich and poor classes, Sitharaman said it appears so because personal income tax collections exceeded the corporate tax. There are more people today with income that is taxable. Now, more income is visible in the formal sector.

“So, the economy is no longer narrow, and it’s not just confined to the elite. The middle-class basket is widening. Between 2013-14 and 2024-25, the number of taxpayers, that is, people filing returns or TDS deducted, rose from 5.26 crore to 12.13 crores,” she said.

In the last 11 years, the number of taxpayers has doubled. It has grown with a CAGR of 7.9 per cent. “So, that is the largest structural expansion of the middle class in this country. So, suppression cannot happen if the tax rate is widening. And if the (tax) net itself is widening, it’s not because of suppression. People are coming on board to pay, and coming on board to pay not because we are bringing more rates,” she said.

On the contrary, even as this expansion is happening, the income tax limit has increased to Rs 12 lakhs for everybody and Rs 12.75 lakhs for the salaried class. “If 12.76 lakhs of the salaried class don’t have to pay tax. Where is suppression? Second, the standard deduction has also been enhanced. The new tax regime has simplified filing and due diligence, she said.

Moreover, the next-generation GST rationalisation has also lowered household costs. Their monthly expenses are decreasing because of lower GST, where every item’s rate has decreased.

“Inflation is also at a historical low. So, somewhere middle-class suppressed cannot coexist with real incomes rising and with record low inflation. And there is an upward mobility of the workforce as well,” she said.

Sitharaman further said steps taken in the Budget prove the country’s resolve to build a resilient, self-reliant India and urged the Rajya Sabha members to ask their respective State Governments to participate in schemes announced in the Budget.

She also countered the Opposition charge of expenditure curtailment in several welfare schemes and said there is no denial or stoppage of funds to States on any schemes.

Without naming the Leader of the Opposition, Rahul Gandhi, she said, “There is no way anyone can decry saying, oh no, but this economy is probably dead. This economy is not really doing well. These kinds of nay-sayers are only mocking at the people of India, who are really doing their bit to contribute to India’s growth”.