NITI Aayog member Bibek Debroy on Tuesday pitched for taxing agriculture income, an opinion contrary to the government’s stated position.
In addition, the member of the government’s top think tank also suggested that exemptions on personal income tax should be removed to increase tax base from the current about 37 million in the country of 1.3 billion of people.
“On expanding the base on the personal income tax side, other than elimination of exemptions, is to also tax rural sector, including agriculture income above certain threshold,” Debroy said in a press conference.
Taxing agriculture income is a politically sensitive issue and successive governments have refrained from doing so.
As recent at March 22, Finance Minister Arun Jaitley had assured Parliament: “Agriculture income is not taxed and will not be taxed”.
When asked what should be the threshold of imposing income tax on rural sector, Debroy said it could be decided after taking into account the average income of either three years or five years.
“I don’t believe in artificial distinction of rural and urban, so whatever is the threshold on personal income side on urban side, should be the exactly same on rural side.
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“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 years period as agriculture income is subject to annual fluctuations, barring that threshold should be the same,” said Debroy, a noted economist.
NITI Aayog had called reporters for briefing on its three-year draft action agenda for accelerating the economy.
NITI Aayog Vice-Chairman Arvind Panagariya, who was present at the press conference, however refrained from answering questions on taxation of agriculture income.
In May 2016, the Prime Minister’s Office had advised the NITI Aayog to prepare documents on 15-Year Vision, Seven-Year Strategy and Three-Year Action Agenda.