NEW DELHI: A day after a faceoff occurred between finance minister Nirmala Sitharaman and MP Raghav Chadha in the Rajya Sabha, the AAP leader on Friday countered Sitharaman’s claim on the new tax relief announced in this year’s Union Budget.
Contesting Sitharaman’s marginal tax relief argument she presented in the Upper House, Chadha said the tax relief rolled out by the government is neither an exemption nor a deduction but a rebate.
The AAP leader said a person would be required to pay tax on his entire income as per the set slabs if the earning surpasses the marginal tax relief ceiling of Rs 12.75 lakh.
Earlier, the finance minister had accused Chadha of “misleading” the house by saying that “a person will have to pay income tax entirely on every rupee beyond Rs 12 lakh salary”.
“No, it is not so. The marginal relief takes the income tax further down,” Nirmala Sitharaman in the Rajya Sabha.
Further substantiating, the finance minister: “Suppose a person earns Rs 12.1 lakh. The tax without marginal relief would have been Rs 61,500, but with marginal relief given in the budget, the taxpayer pays only Rs. 10,000. If the taxpayer earns Rs. 12.5 Lakh, the tax without marginal relief would have been Rs 67,500 but with marginal relief, the tax will be only Rs. 50,000. It is only when the taxpayer’s income reaches Rs 12.75 lakh, the tax will be Rs 71,250, with or without marginal relief.”
Chadha, countering the finance minister’s argument, released a clip on X, saying that Sitharaman “technically tried to complicate” his example to prove it wrong.
“The 12 lakh tax rebate given by the government is neither an exemption nor a deduction. It’s just a debate. It means if a person earns more than 12 lakh the tax shall apply on the entire earnings. I had given an example of the same concept and to counter that the finance minister technically tried to complicate it by adding concepts like marginal tax relief to prove my example was wrong,” Chadha said on X.
“Is it not correct that if a person earns above 12 lakh, the person will have to pay tax on the entire income,” he asked.
Acknowledging the marginal tax relief up to the level of Rs 12.75 lakh, Chadda further asked: “If a person earns Rs 13 lakh in a financial year, will that person be charged tax on the entire Rs 13 lakh according to the set slab or not? Or will Rs 12 lakh rebate get minus from Rs 13 lakh, making Rs 1 lakh taxable?
“The fact is the tax will be imposed on the entire 13 lakh rupees,” he asserted.
Chadha further said, “Moving forward I hope the finance minister will distance herself from personal attacks and discontinue the effort to technically distort the simple tax concepts before the people”.
