Modi govt's 'tax terrorism' bleeding middle class: Cong

New Delhi: Questioning the BJP government over corporate tax cuts leading to a revenue loss of Rs 1.84 lakh crore, Congress on Tuesday asked why the middle class was charged a peak tax rate of 30 per cent against 22 per cent for corporates. Congress spokesperson Gaurav Vallabh further said that Prime Minister Narendra Modi led government's 'tax terrorism' is bleeding the middle class with a peak IT rate of 30 per cent, while big corporates are reaping windfall gains at reduced rate of 15 per cent to 22 per cent.

"The Centre had claimed that Corporate Tax cut would help increase corporate tax collection but the Parliamentary Committee on Estimates said in its report on August 8 that corporate tax cut of 2019 had resulted in a negative "revenue impact" of Rs 1.84 lakh crore," he said. Vallabh further said that on September 20, 2019, the government announced the corporate tax cut from a base rate of 30 per cent to 22 per cent for existing firms without exemptions/incentives and from 18 per cent to 15 per cent for new manufacturing units. "What is more important for the government during a pandemic taking a negative revenue impact of Rs 1.84 lakh crore in two years due to a corporate tax cut (average Rs 92,000 crore per annum) or increasing the MGNREGA Budget to 2.26 times of the current allocation (Budget Estimate for FY23 in MGNREGA is Rs 73,000 crore)," he asked.

"Why are such rate cuts limited to corporates, why the middle class is taxed at a peak income tax rate of 30 per cent (that too without setting off the expenses) and corporates at 15 percent or 22 per cent," he further asked. The Congress leader said that after the corporate tax cut a new record was also made when corporate tax collection in 2020-21 was Rs 4,57,719 and fell below income tax collection of Rs 4,87,144 crore. For 2021-22, the corporate tax cuts may give a revenue loss of more than Rs 1 lakh crore, sufficient for transferring Rs 20,000 per annum per family to the bottom 20 per cent of families, Vallabh claimed.

"This announcement was made exactly two days before the 'Howdy Modi' event organised on September 22, 2019 in Houston, USA and at a time when the finance minister had told states at Goa's GST Council meeting that the Centre had no money to pay GST compensation anymore," he said.