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LATEST NEWS UPDATES | Govt will not impose any tax on agriculture income, clarifies FM Jaitley -Arup Roychoudhury, Sanjeeb Mukherjee & Archis Mohan

Govt will not impose any tax on agriculture income, clarifies FM Jaitley -Arup Roychoudhury, Sanjeeb Mukherjee & Archis Mohan

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published Published on Apr 27, 2017   modified Modified on Apr 27, 2017
-Business Standard

NITI Aayog says Debroy's views 'personal'

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 think-tank, the NITI Aayog, seemed to suggest in an interaction with reporters on Tuesday that taxes should be imposed on farm income above a certain 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 such a recommendation 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, I categorically state that the central government has no plan to impose any tax on agriculture 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 agriculture income says all farm income is currently exempt from income tax, irrespective of size. While the provision is meant to protect farmers, non-agriculture entities sometimes use it to evade taxes by declaring agriculture as the source of their income.

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

Ramesh Chand, another member of NITI Aayog, told reporters, “I have studied farm income in detail and can assure you that the official position of NITI Aayog is that we don’t favour any tax on farmers’ income, as nearly 85% of India’s farmers are small and marginal who don’t fall within the tax bracket in any case, as their average income is very less. What the recommendations in the draft three-year agenda says that while the agriculture income exemption is meant to help farmers, some entities use it to evade taxes by showing non-agriculture income as agriculture income, which needs to be plugged.”

Taxing agricultural income is a politically sensitive issue and successive governments have refrained from doing so, given the huge rural vote bank they all depend on to win elections.

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Business Standard, 27 April, 2017, http://www.business-standard.com/article/economy-policy/govt-will-not-impose-any-tax-on-agriculture-income-clarifies-fm-jaitley-117042600615_1.html


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