Niti Aayog for taxing agriculture income

Average income of 3-5 years could be used for calculation

Niti Aayog for taxing agriculture income

The Niti Aayog has made a strong pitch for reviewing the tax exemption granted to agriculture income, suggesting that it may be taxed in a manner similar to that of personal income in urban areas.

The suggestions from the government think tank come amid reports that several non-farmers were declaring agriculture as their source of income to avoid paying taxes.

The Niti Aayog members were also circumspect about the demand for farm loan waivers, with member (agriculture) Ramesh Chand saying it was only “one-time relief” which does not contribute much to farmers.

Instead, Chand favoured implementation of policies that would help farmers increase their income from agriculture. Niti Aayog Vice Chairman Arvind Panagariya steered clear of remarks on the farm loan waiver. “It is a decision to be taken by the state governments. It is nothing concerning Niti Aayog. It is a decision for the political leadership to take,” he said.

Asked about taxing agriculture income, Niti Aayog member Bibek Debroy also favoured bringing agriculture income above a certain threshold under the income tax net.

“I don't believe in artificial distinction of rural and urban, so whatever is the threshold on the personal income on the urban side, should be the exactly same on the rural side,” Debroy said.

He said that given the degree of uncertainty on agriculture production, instead of using annual income as a threshold for levying tax, an average income of a three-year or a five-year period could be used to calculate the tax.

“At best, what I can do because it is an agriculture income, instead of using agriculture income for one particular year... what I could do is I average it over three-year period or may over five-year period as agriculture income is subject to annual fluctuations, barring that threshold should be the same,” Debroy said.

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