Jaitley rules out tax on farm income as proposed by Niti Aayog
As per the Constitutional allocation of powers, the central government has no jurisdiction to impose tax on agricultural income,says finance minister Arun Jaitley.business Updated: Apr 27, 2017 10:00 IST
Finance minister Arun Jaitley on Wednesday ruled out tax on farm income, as proposed by the government’s think tank Niti Aayog in its long term vision document.
“I have read the paragraph in Niti Ayog 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,” Jaitley said in a statement.
“As per the Constitutional allocation of powers, the central government has no jurisdiction to impose tax on agricultural income,” he added.
Presenting hits vision document to Prime Minister Narendra Modi on Sunday, the Niti Aayog projected an annual average growth of 8% with faster reforms.
The think tank proposed bringing agricultural income within the personal income tax net, to broaden the tax base and thereby enable the government to reduce the tax rate.
It however clarified that since taxing agriculture income was politically sensitive, the think tank will finalise the draft document only after it received responses from the state governments.
Excluding income from farming, which accounts for about 15% of India’s $2.2 trillion gross domestic product, out of the tax net forces the government to keep personal income tax rate high. Besides, taxing farm income above a threshold will also prevent evasion of taxes misusing the exemption given to farm income.