Finance Minister Nirmala Sitharaman has been criticised for the tax cuts for India’s middle class in her budget. On Saturday, she addressed the concerns head-on at Business Today’s Budget 2024 roundtable.

Her answer was clear: the government’s approach is one of simplification and rationalization, not just for the middle class, but for all taxpayers.

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When asked about the involvement of the middle class in futures and options, Sitharaman was emphatic: “Futures and options are indeed for the middle class. Excuse me if I say, why can’t the middle class be there? Of course it can be. But futures and options come with risks. We have not imposed any unnecessary hike. For options, it is a minimal change and for futures, the tax has only been marginally doubled from 0.0125 to 0.02.”

Addressing the fear of black money resurfacing in real estate after the removal of indexation, Sitharaman remarked: “Haven’t we as a country always said, why all this differentiation between different asset classes? Why can’t it be simple? Why don’t you rationalise it? That has been a very strong argument. In gold, the treatment is one way; in real estate, it’s another way; in equities, it’s different again. The rates also vary. People have told me about TCS and TDS. For the middle class, I said, if there is TCS, you can take it as a credit towards your TDS. All the inputs from the middle class over the years have been considered. When I ask whether we should treat all asset classes the same, that is exactly what we have done.”

On possible future tax changes, Sitharaman stressed the importance of stability and simplicity. “I announced in the budget that a committee will look at simplifying direct taxes in the next six months. If I do one thing now, the rest will be addressed by this committee. So, in the name of stability, should we never change it even if it is complex? We cannot. There has to be a balance. When GST was introduced, different states had different rates. All the officials sat together to find a common ground. Similarly, the rule of thumb now is that we don’t want any additional complexity.”