Middle class upset: Mohandas Pai asks I-T dept to support its claims with data

Aarin Capital chairman TV Mohandas Pai continued his tirade against the union budget on Tuesday, seeking to debunk its claims on the personal tax and capital gains tax front, and demanding data from the income tax department, stressing that the proposals have left middle classes angry.

The actual income tax exemption limit is Rs 3 lakh per annum, but “Rs 7.75 lakh is the story they are trying to sell you,” he said in a series of posts on the microblogging site X.

An income tax paying citizen would have to spend and invest a lot of money to reach Rs 7.75 lakh limit. “What happens to people who cannot afford to do that?”


Pai, a former director at Infosys, demanded data from the income tax department to support its claims that the budget has given relief to taxpayers. The per capita income in India, he said, was Rs 2.11 lakh as of March 31, 2004. It would go up to Rs 2.54 lakh if two poorest states were removed from the calculation. Is Rs 3 lakh the limit for income tax, 3.75 times per capita income, he asked.

The venture capitalist sought to know the sources for the income tax department’s claims that property prices go up by 12-16% per year to justify withdrawal of indexation benefits.

“You folks have broken the trust of the middle class by this thoughtless action. When tax changes, please grandfather all previous matters except litigation. For angel tax, withdraw prior litigation,” he said, referring to the changes in capital gains tax regime.

Middle class, Pai said, were very angry and upset. When capital gains tax was introduced by the then finance minister Arun Jaitley, past equity value was grandfathered and protected.

“Yes, the middle class is also a mind set of values and ethics, not only money.” Per capita income in India excluding the poor states like UP and Bihar is around Rs 2.54 lakh per annum. For a family of four, that is Rs 10.20 lakh per annum, would have mostly one earning member. “That is the average,” Pai said, adding that finance minister Nirmala Sitharaman did not seem to get that. “Middle class is upset because indexation is taken away. Simple solution: have indexation till April 1, 2024, then unify the rates.”