New Delhi, Feb 12: High personal income tax collection does not necessarily mean that the middle class is being suppressed or crushed in the country, Finance Minister Nirmala Sitharaman on Thursday said in the Rajya Sabha.
There is no evidence of any suppression of the middle class in the country, but there is evidence of middle-class expansion, she 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 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,” she said.
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.
Comparing the expenditure on government schemes, she said only Rs 37,000 crore was unspent in 14 social sector schemes in the last 10 years, compared to Rs 94,000 crore during the UPA regime.
Sitharaman also rubbished Opposition criticism of announcing schemes without allocation, citing many cases during the previous UPA government.
She further said the Congress sheds crocodile tears on rising debt, as the government does not borrow excessively.
The finance minister said the Centre’s fund is not a free pool of cash that can be used; it is the hard-earned money of citizens.
She further informed that the government has sent over Rs 48 lakh crore directly into accounts of beneficiaries through DBT and saved Rs 4.31 lakh crore by plugging leakages.
The Budget is never forgetful of past; it remembers fragile days, double-digit inflation, she said. Now there is no inflation crisis in India today; it has been tamed, the Finance Minister said.
Inflation has never been lower than what it is today, she said. Now, India maintains its low inflation, which is not by chance, but by strategy, she added.
While attacking the opposition, she said growth without jobs was a UPA-era story, not now.
Sitharama said the country is passing through a rare phase, when it has “macro-economic balance, which is unique to achieve”.
“It is an achievement of the entire country. That is, you are having a good, high rate of growth of the GDP, and there is a low inflation, which is being held at that kind of a level continuously,” she said.
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”.
She further informed that the government is establishing an ‘Education to Employment and Enterprise’ Standing Committee in the 2026-27 budget to prepare youth for the services sector.
