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NITI Aayog wants agri income taxed
The National Institution for Transforming India (NITI) Aayog has recommended a review of the tax exemption on agriculture income. In its three-year action agenda, circulated among the Chief Ministers at its meeting recently, the Aayog said this was necessary as the blanket relief was being misused by non-agricultural entities to generate black money.
Blanket relief being misused to generate black money
New Delhi: The National Institution for Transforming India (NITI) Aayog has recommended a review of the tax exemption on agriculture income.
In its three-year action agenda, circulated among the Chief Ministers at its meeting recently, the Aayog said this was necessary as the blanket relief was being misused by non-agricultural entities to generate black money.
Officials in the know said the exemption was meant to protect farmers but many non-farmers were declaring agriculture as their source of income to evade taxes. “This loophole needs to be plugged,” the Aayog said.
NITI Aayog Member Bibek Debroy, one of the co-authors of the "Three-Year Agenda" and the main architect behind the proposal, told reporters that it was now up to individual states to implement it.
Agricultural income comes under the purview of states in the Seventh Schedule of the Constitution. In addition, the government could consider expanding the tax base by eliminating exemptions given to corporates, he said.
Debroy has also made a strong case for removal of exemptions on personal income tax. On the threshold of imposing income tax on rural sector, he 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," he said.
The agenda presented by the think tank also touched upon the bad loans issue, advising banks to ramp up the pace of auctioning large non-performing assets to private asset restructuring companies. Bad loans in India's financial system had ballooned to over Rs 7 lakh crore at the end of December last year.
Laying emphasis on food processing, NITI Aayog Member Ramesh Chand, who drafted the section, said it is one of the most efficient ways of creating employment while ensuring higher prices for agricultural products.
