Tax farmers, says NITI Aayog

Mukesh Ranjan

Tribune News Service

New Delhi, April 25

The NITI Aayog has put forth an idea to the government to bring agricultural income above a certain threshold under the ambit personal income tax. As part of its suggestions on tax reforms and expanding its base, the national think-tank said the move will help reduce incidences of “tax avoidance”.

NITI Aayog member Dr Bibek Debroy, elaborating on the chapter pertaining to “Expanding Tax Base” in the draft “Three Years Action Agenda”, said farmers should pay income tax in line with urban dwellers as the country was faced with a scenario of low income tax base.

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“There are roughly 225 million households in the country out of which two-third are in the rural areas, which are almost out of the tax net. The remaining 37.5 million households in the urban areas fall in the tax net, which also include half of them below the exemption limit.”

Suggesting that the government should do away with the distinction between “rural and urban”, Dr Debroy argued: “The agricultural income above a certain threshold, which could be the same as in the case of personal income tax, should be taxed.” The threshold agricultural income could be arrived at by “taking the average of three or five years of income of farmers and also the income fluctuations”.

It was Dr Debroy on whose recommendations the government took the decision to merge the age-old separate Rail Budget with the Union Budget. Beginning this financial year (2017-18), Finance Minister Arun Jaitley presented the unified Budget comprising a separate chapter on Railways.

Dr Debroy, however, refused to elaborate on the roadmap to tax the agricultural income. NITI Aayog Vice-Chairman Arvind Panagaria, though, avoided offering any comment on his assertions.

Jaitley, during the recently concluded Budget Session of Parliament, had made the assertion there was no plan to tax agricultural income.