Union Finance Minister Arun Jaitley on Wednesday said the Centre had no plans of imposing any tax on agricultural income as suggested by Niti Aayog member, economist Bibek Debroy. “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 Centre has no plan to impose any tax on agriculture income. As per the Constitutional allocation of powers, the Centre has no jurisdiction to impose tax on agricultural income,” the minister said in a statement issued by the Press Information Bureau.
Debroy had on Tuesday said that taxes should be imposed on farm income above a certain threshold to expand the country’s tax base. “On the personal income tax side also exemption should go. 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.
On the threshold of imposing income tax on the rural sector, he had 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.”
The Niti Aayog is believed to think that the blanket tax exemption, which is meant to be a relief for farmers, is heavily misused by people who are not farmers and declare their income to be from agriculture so that they can skip paying taxes.