The income tax department confirmed on Friday that wealth tax will be imposed on agriculture land falling within eight km of municipal corporation limits across the country.
Reacting to the levy, Punjab chief minister Parkash Singh Badal termed it a "very harsh" measure and claimed that he would oppose it.
"Yes, wealth tax will be imposed on agriculture land too, which falls within eight km of municipal corporation limits. We are conducting a survey before issuing notices to farmers, liable to pay the tax," commissioner (income tax), Jalandhar-1, Rakesh Suri told Hindustan Times.
"It is a policy decision taken by law makers. We are bound to implement the decision," Suri said.
Meanwhile, the chief minister added: "Farmers in the country, especially from Punjab, will not be able to take the additional financial burden. THe state's farmers are already under acute financial distress due to low rate of return from their land.
"The centre takes decision without thinking about the consequences. If farmers are forced to pay wealth tax, they will have no option other than to commit suicide," Badal said.
He added that the state government would hold consultations with eminent parliamentarians on the issue and engage top income tax lawyers to oppose the imposition of wealth tax.
The farmers that are found liable to pay the wealth tax would have to pay 1% of the total market value of the agricultural land, within eight km of the municipal corporation limits.
Notably, there is no income tax on agriculture income. However, this wealth tax is being levied around agriculture land under Wealth Tax, Act 1957.
Under the definition tax would be levied on urban land inside the city and land within eight km from municipal corporation limits and 1-2 km from municipal committees (in crow fly distance calculation), which covers 80% of the state.
A chartered accountant, Punit Oberoi, when contacted by HT on the issue said "The Chelliah Committee report, formed to study the issue, had clearly suggested that wealth tax should be levied only on the non-productive assets".
"Another important point to note is that under the definition of Urban Land, a piece of land in an urban area on which the construction of building is not permissible under any law is excluded. This thus means that unless change of land use is changed to non-agricultural purpose, the construction of building is not allowable and hence levy of wealth tax on agriculture land is not justified," Oberoi added.