Agri-tax can prevent flow of stash into farming
Niti Aayog member Bibek Debroy raised a hornet’s nest with his suggestion that agriculture should be taxed. Agriculture has always been considered a sacred cow that could not be taxed and sensing the sensitivity of the issue Union finance minister Arun Jaitley, who was in Moscow at that time, was forced to issue a statement. “To obviate any confusion on the subject, and said “I categorically state that the Central Government has no plan to impose any tax on agriculture income,” adding that he had read the Niti Aayog report entitled ‘Income Tax on Agriculture Income’.
Arvind Panagariya, Niti Aayog vice-chairman, also said told reporters at that time “How can we talk about taxing farmers’ income when 80 per cent of rural areas are connected to agriculture and we are talking about doubling farmers’ income.” He even went further to say that the idea was to plug loopholes to prevent non-agriculturists from converting their black money into white by showing it as agriculture income.
No one can agree more with this than farmers’ leader Vijay Jawandhia who points out that an interesting fallout if agriculture is taxed, is it will stop the flow of black money into green agriculture. The rich urban businessmen, politicians, bureaucrats, actors etc., with surplus unaccounted money, invest in farms as the profits are tax-free.
In 2010, the media went overboard about how Bollywood icon Amitabh Bachchan and his family bought nearly three to four hectares of land in Uttar Pradesh worth totally around `3 crore and probably got the saat-bara document which confirms they were farmers. But this is digressing. The point is that famous or otherwise, people with surplus or unaccounted money do invest in agriculture.
Mr Jawandhia said considering that income of `2.5 lakh a year is free, how many farmers earn this annually?
The government, he said, “would also have to come out with a modus operandi for calculating the farmer’s taxable income. For instance, it will have to calculate the depreciation on soil, implements, machinery like tractors. We have no problem,” he says, adding that the Commission for Agricultural Costs and Prices will have to be more transparent.
Mr Jawandhia said the so-called success stories in agriculture were mostly from people who had other sources of regular income as they could afford to take risks if they own four acres of land.
The government would have to come out with a white paper to show how many acres of land a family would have to own to earn over `2.5 lakh annually from agriculture.
This would be equal to a class IV government employee who gets a minimum wage of `18,000 a month according to the Seventh Pay Commission. Pointing out the discrimination against farmers Mr Jawandhia said urban individuals get loans for purchasing refrigerators and cars etc., but a farmer cannot get a loan to dig a well in his farm.