Amid the ongoing controversy over taxing agricultural income, Chief Economic Adviser Arvind Subramanian on Friday said states should be able to make a distinction between rich and poor farmers. “When you say farmer, people think that you are going after the poor farmer,” he said, adding that the political discourse had made it difficult for these distinctions to be made.
His comments came days after Finance Minister Arun Jaitley had clarified that the Centre had no plans of imposing any tax on agricultural income as suggested by Niti Aayog member Bibek Debroy. Jaitley had said that the Centre has no jurisdiction to impose tax on farm income as per the Constitutional allocation of powers.
Subramanian made the comments while speaking at the Confederation of Indian Industry’s annual session on Friday. He asked why states had not made a distinction between poor and rich farmer. “The legal situation is…nothing prevents state governments from taxing agriculture income. The constitutional restriction is on Central government taxing agriculture income,” he said according to PTI. “Why can’t we say rich, regardless of where they get their income, should be taxed,” he said.
Debroy on Tuesday had said that taxes should be imposed on farm income above a certain threshold to expand the country’s tax base. 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.”