No plan to tax farm income, says Jaitley

Finance Minister Arun Jaitley said on Wednesday that the Narendra Modi government will not impose any tax on agriculture income.

This came after Bibek Debroy, member of the Centre´s main thinktank, the NITI Aayog, seemed to suggest in an interaction with reporters on Tuesday that taxes should be imposed on farm income aboveacertain threshold to expand the tax base.

The Aayog, however, said Debroy´s views were ´personal´ and not those of the Aayog.

It also said that taxing farm income is neither the view of the Aayog nor has sucharecommendation been made anywhere in the draft action agenda document, as circulated to the governing council at the meeting on April 23. The council meeting was chaired by Prime Minister Narendra Modi and attended by almost all chief ministers.

“I have read the paragraph in the NITI Aayog report entitled Income Tax On Agriculture Income.

To obviate any confusion on the subject, Icategorically state that the central government has no plan to impose any tax on farm income.

According to the constitutional allocation of powers, the central government has no jurisdiction to impose tax on agricultural income,” Jaitley said, according to an official statement from the ministry.

According to the draft three year action agenda, the paragraph on income tax on farm income says all agricultural income is currently exempt from income tax, irrespective of size.

While the provision is meant to protect farmers, nonagricultural entities sometimes use it to evade taxes.

In order to mitigate the generation of black money, the loopholes need to be plugged, the action agenda stated.

Ramesh Chand, another member of the Aayog, told reporters, “Ican assure you that the official position of the Aayog is that we don´t favour any tax on farmers´ income.

Nearly 85 per cent of India´s farmers don´t fall within the tax bracket.

The recommendations in the draft threeyear agenda says that while the agriculture income exemption is meant to help farmers, some entities use it to evade taxes.” Taxing agricultural income isapolitically sensitive issue and successive governments have refrained from doing so, given the huge rural vote bank.

“Agriculture income is not taxed and will not be taxed,” Jaitley had assured Parliament in the Budget Session.

Mean while, the Bharatiya Janata Party (BJP) farmers´ cell chief Virendra Singh chided policymakers who demanded taxing of agricultural income.

“Such people do not understand India´s sociocultural ethos.

Agriculture is the bedrock of society.

It isn´t just any other business or profession,” Singh,aLok Sabha member from Uttar Pradesh (UP), said. The MP said economists who do not understand agriculture cannot be allowed make policies for the sector.

Singh has demanded that Parliament should holdaspecial session to discuss agrarian distress and passadefinitive resolution.

As for tax on the income of big farmers, particularly those who use the garb to save taxes, the MP from Bhadohi said state governments should probe such cases.

The MP, who had playedakey role in drafting the BJP´s manifesto for the UP Assembly polls, also criticised economists who argue against farm loan waiver.

The Business Standard New Delhi, 27th April 2017