Union finance minister Arun Jaitley on Wednesday clarified that the government has no plans to tax the agricultural income as proposed by NITI Aayog.
“I have read the paragraph in NITI Ayog Report entitled ‘Income tax on agriculture income’. To obviate any confusion on the subject, I categorically state that the Central Government has no plan to impose any tax on agriculture income,” Jaitley was quoted as saying in a statement in The Hindu.
“As per the Constitutional Allocation of Powers, the Central Government has no jurisdiction to impose tax on agricultural income,” he added.
On Tuesday, NITI Aayog member Bibek Debroy had made a strong case for taxing agriculture income.
"On expanding the base on the personal income tax side, other than elimination of exemptions, is to also tax rural sector, including agriculture income above certain threshold," Debroy had said at a press conference.
Due to its exempt status, agricultural income has been seen as a loophole being used by many wealthy to evade taxes. Many experts have been demanding closing this loophole for long. However, neither the Congress nor the BJP has had political will to act tough on this front yet.
As recently as 22 March, Jaitley had assured Parliament: "Agriculture income is not taxed and will not be taxed".
When asked what should be the threshold of imposing income tax on rural sector, Debroy said it could be decided after taking into account the average income of either three years or five years.
"I don't believe in artificial distinction of rural and urban, so whatever is the threshold on personal income side on urban side, should be the exactly same on rural side.
"At best what I can do because it is an agriculture income, instead of using agriculture income for one particular year, what I could do is I average it over three-year period or may over five years period as agriculture income is subject to annual fluctuations, barring that threshold should be the same," said Debroy, a noted economist.
(With PTI inputs)
Updated Date: Apr 26, 2017 14:43 PM