Page 117 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes vote bank no government can dare to touch this subject matter namely of taxing the
agricultural income of the agriculturists in India.

The fact remains that fiscal concessions are granted by the statute to certain categories of
tax payers to achieve a particular goal. For example couple of years ago the exporters of
India were granted complete tax holiday in respect of their foreign exchange earnings.
Now the Government feels that this category of tax payers are right now out from the
clutches of the problems and that is reason that export income is now subjected to income-
tax. Whenever the point comes of taxing the agricultural income the eyes of the statute
makers is focused on one single objective namely the impact on the next elections.
A real bold and dynamic approach is now needed in India whereby all the political parties
and all the Chief Ministers of India organize a conclave to debate and discuss the issues
concerning taxation of agricultural income in India.
Persons who are engaged in cultivation and produce agricultural income always enjoy the
sympathy of the statute makers of the country. The rising trend in suicides being committed
by agriculturists also goes to support the sympathy in favour of the agriculturists of the
country. With the rise in the suicide rate by the agriculturists more and more sympathy
goes in favour of agriculturists and at that point of time to think about taxing agricultural
income might bring home a fear of more and more suicides being further committed by
the agriculturists. With regard to suicides by agriculturists the Government should analyse
the reason behind the committing of the suicide and should bring home positive ideas to
control such suicides by the farmers of the country. But on the other hand taxing agricultural
income should not be ignored keeping in view the rising money requirement of the
country to meet fiscal deficit and to develop the infrastructure of the country.
In case income tax is levied on agricultural income without considering the real impact on
the agriculturists, all those persons who are attached with the political parties would
immediately jump upon to say that as a result of taxing the agricultural income, the poor
farmer will virtually die because of the increased burden of income-tax on him in case
agricultural income-tax is levied in the country.

If we analyse the land holding by individual persons in India, we would find that in
majority of the cases the land holding is in the name of different family members of the
farmer. As a result of land holding being available in different individual names in the
family, the advantage is that each family member of the farmer will get income-tax
exemption up to ` 2,00,000 per annum even if the agricultural income is subjected to
income-tax. The practical impact of this can be seen from an example of a family of five
persons of a farmer and in case agricultural income is subjected to tax but still all the five
family members will have a combined income of ` 10 lakhs in a family which would be
exempt from income-tax. This is the special advantage available to a farmer and this
advantage is generally not available to all those tax payers in India who are not farmers.
For example in another family of five persons where the head of the family is doing a job
or running a shop, he finds that income-tax exemption is available of ` 2,00,000 only to
him because other family members who are not working or who are not running their
separate shops hence have no income. Hence, from practical angle also it can be argued
with confidence that if agricultural income is subject to income-tax, even then the poor
farmer will have no problem with regard to income-tax payment just because of the fact
that the basic income-tax exemption of ` 2,00,000 per annum would equally be applicable
to a farmer. Hence, the law makers in the country as well as the most respected
parliamentarians of the country should now think of taxing agricultural income so that
tax burden is at par for salaried employees, for businessman as well as for the persons
carrying on agricultural activities.
Contd...

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