Need to tax agricultural income: NITI member

IANS 26 April 2017

New Delhi, Noted economist and NITI Aayog member Bibek Debroy on Tuesday said there was a need to expand the tax base by bringing agricultural income under the tax ambit.

He said there was also a need to eliminate exemptions on personal income tax.

Talking to reporters here, Debroy said while the exemptions on personal income tax need to go, the "eventual answer to expand the tax base is to tax the rural sector, including agricultural income above a certain threshold.

"While only the agricultural income of farmers is exempt from taxation, their non-agricultural income also goes un-taxed," he said.

Asked what should be the threshold for taxing agricultural income, Debroy said it should be same as in the urban areas.

"I don't believe in the artificial rural-urban distinctions. So whatever is the threshold of personal income tax in urban areas should be for the rural areas as well.

"At best, what (we) can do is -- because it is agricultural income -- (we) can average it out over a three- or a five-year period instead of using income from one particular year... because agricultural income is subject to annual fluctuations," Debroy said.

"Barring that, the threshold should be the same."

During the press conference, NITI (National Institution for Transforming India) Aayog Vice Chairman Arvind Panagariya shared details of the draft three-year action plan proposed to replace the erstwhile Five-Year Plans.

Panagariya said that over the next three years, there was a need to tackle tax evasion, expand the tax base and simplify the tax system through reforms.

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Comments

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Vikas Sivaraman

9 years ago

It is all well to sit in some high place and prescribe that Agricultural income should be taxed and personal income tax exemptions should be done away with. It betrays a lack of understanding of ground realities. It also suggests that the perpetrator is somewhat non conversant with the picture on the street.
First of all - the laws have to be implemented. It is precisely this lacuna that allows for almost anyone to get away with breaking and bending the law with impunity. And this allows for a redoubtable performance in public office. If only the law was enforced as it should be there would be a level playing field for all.
Yes big agriculture needs to be taxed - whether of not the income is agriculture derived or derived from associated activity. There are enough politicians with unbelievably enormous agri incomes and they get away without paying a single paisa as tax. That needs to change. And a distinct distinction needs to be made between the average farmer and these gigantic farmers.
As far as the personal income tax exemptions are concerned - take those away and you will see a disgruntled population - although a 1.5% tax paying population should hardly matter i suppose!! But before embarking on this misadventure I think there are other related issues to be examined and rectified - why are political party's incomes tax exempt?? What is the govt planning to do about controlling inflation and prices of essential commodities (at the very least). What is it doing about getting more citizens into the tax net?

SRINIVAS SHENOY

9 years ago

I feel the steps taken by the government to expand the tax base, tackle tax evasion and simplification of the entire tax system is a step in the right direction.