Page 118 - DCOM301_INCOME_TAX_LAWS_I

Unit 4: Exemptions and Deductions - I

Notes
Similarly, the agriculturist, if income-tax is levied on him will also be able to save taxes
over and above the basic income-tax exemption limit if he were to make investment by
way of contribution to the Public Provident Fund or to a Life Insurance Policy within the
framework of section 80C of the Income-tax Act, 1961. I personally feel that if income-tax
is levied on agricultural income, the farmers of the country will be able to develop the
habit of saving for their bright future in the years to come especially because of the
income-tax provision granting tax deduction on certain investments etc., etc.
It is certain that in case agricultural income-tax is levied in India, the farmers of the
country in next one decade will have more money power available at their disposal just
because of the savings made by them through various investment channels so as to achieve
a tax deduction in terms of section 80C of the Income-tax Act, 1961. Likewise, a farmer if he
is taxed on the agricultural income apart from making a tax saving under section 80C will
also be able to save income-tax like any other individual if he were to invest in a residential
housing. Thus, the problem of the Government to provide housing for those who are in
the villages can be a thing of the past once the agricultural income is subjected to tax and
our agriculturists enjoy the same tax benefit which are available to other tax payers of the
country whereby the end result after a decade would be more prosperity to the farmers,
more housing being available to the farmers because of their own investment in housing
sector and so on.
Driving in Mercedes cars are a common feature in Punjab particularly where large number
of agriculturists buy luxury cars, luxury homes and luxury holidays. Tax Paying public of
India is frustrated when they find that a tax payer doing hard work in his business after
making payment of income-tax is not able to buy a Mercedes car but an agriculturist who
is required to work much less in comparison with a person in a city goes scot-free for
making investments in the manner he likes just because there is no income-tax on the
agricultural income earned by him. Hence, if the Government takes a decision to levy tax
on agricultural income, then surely the rich and famous agriculturists of India would be
required to make payment of income-tax which will increase government revenue on the
one hand and which will increase GDP ratio in the country and would finally help in the
holistic development of the country.
Sometimes a question may also arise as to how an illiterate poor farmer will be able to
comply with the formalities required for income-tax payment and maintenance of the
accounts etc. to derive the taxable agricultural income. Well, the answer to this can be
found out by reference to the provisions contained in the Income-tax Act especially in
section 44AD whereby up to a turnover of ` 1 crore a person engaged in business can walk
away without maintaining the accounts and is subjected to income-tax on a presumptive
basis. Same set of provision can be applied even for taxing agricultural income whereby
the poor and illiterate agriculturists also will not have any problem to comply with the
provisions of income-tax law.

Again and again it may be noted that the so called poor small farmer in any case would be
outside the clutches of payment of agricultural income-tax because the income in any case
up to ` 2,00,000 per annum for every adult member of the farmer’s family will be exempt
from income-tax. I also strongly feel that if agricultural income-tax is levied in India, then
it is possible that the farmers would be tempted to go in for research based new innovations
in agriculture and would be seen using new technology, new machinery and new vistas to
achieve higher agricultural output which will be helpful to the country. Hence, if
agricultural income-tax is levied in India then fruit juice, ayurvedic herbs production and
such other connected activities in agriculture will flourish and there would be desire
amongst the agriculturists also to achieve more output from the land which they own.
Contd...

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