Notice to govts on PIL for tax on rich farmers

The Punjab and Haryana high court on Tuesday issued notices to the Centre and the Punjab government for replies by November 17 on a public interest litigation (PIL) challenging total exclusion of agricultural income from levy of income tax. The plea seeks tax on agricultural income of affluent farmers.

In the plea taken up by a division bench of justices Ajay Kumar Mittal and Amit Rawal, advocate Hari Chand Arora argued that the provision contained in section 10(1) of the Income Tax Act, 1961, providing total exemption of agricultural income from income tax is “highly arbitrary”, as even “rich and affluent” farmers are being given benefit of this provision.

“Big industrialists, transporters, liquor barons are taking benefit of this provision and causing huge loss to revenue by diverting income from other business to show it to be agricultural income for avoiding liability to pay income tax,” he told the court.

He termed the exemption as being against basic principles of the Constitution which envisaged India to be a socialist republic.

He submitted that rich farmers be denied tax exemption on the lines of not giving reservation in government jobs to those persons belonging to Other Backward Classes who have wealth or income above specified limits.

Referring to various affidavits filed by political leaders of Punjab during the state elections this year, Arora submitted that rich leaders with business empires are taking benefit of such exemption from paying tax on their farm income.

He named “beneficiaries” such as former CM Parkash Singh Badal, his son and former deputy CM Sukhbir Badal, and ministers in the current Congress government, Manpreet Badal and Rana Gurjit Singh.

It was also argued that the Tax Administration Reforms Commission (TARC) in its recommendations in 2014 had stated that farmers having agricultural income of more than Rs 50 lakh should at least be made liable for tax on their agricultural income, but the recommendation was rejected by the Central Board of Direct Taxes (CBDT).

Big industrialists, transporters, liquor barons are taking benefit of (the exemption) and causing huge loss to revenue by diverting income from other business to show it to be agricultural income... to pay income tax. HARI CHAND ARORA, in petition filed before Punjab and Haryana high court