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Income Tax Laws – I

Notes It is expected that dynamism amongst the agriculturists will be on fast track in case
agricultural income-tax is levied in India.

Nation first and not just vote politics should be on the back of the mind of every political
party if they really want to tax the agricultural income in India. It is often seen that while
the tax payers of India feel cheated because they are being subjected to income-tax and
persons deriving agricultural income specially the rich farmers are not being subjected to
income-tax at all. A large number of politicians as well as a large number of business
communities also owns substantial part of agricultural land in India and are deriving
substantial tax free agricultural income. Hence, if agricultural income is subjected to
income-tax in India, it is felt that there would be no agony or problem especially to these
rich farmers because they would be placed at par with other tax payers of India earning
big income and engaged in non-agricultural income producing activities.
If the Government finds that it is not ready right now to tax the entire agricultural income,
in that situation they may initially exempt agricultural income by farmers having land
holding up to five acres and likewise to start with, the Government may also exempt
taxing agricultural income in case it is derived by cultivating rice, wheat and vegetables.
The theme is that at least let there be a start for taxing the agricultural income of particularly
the rich farmers and thereafter let the Government study its impact, the tax collection, the
problems and then come to an amendment of taxing agricultural income. It is a fact that
taxing agricultural income is a State subject but just like having a debate on GST with the
States the Government should now have a debate with the States for taxing agricultural
income. It is strongly felt that if agricultural income is taxed and in case the policy of
taxing agricultural income is designed in a very scientific manner, then it will have no
adverse impact on the common farmer but the Government would find easily substantial
amount coming in its kitty from the agricultural income derived by rich farmers and rich
corporates.
Way back in the year 1975 a Committee on Agriculture Taxation was headed by Dr. K.N.
Raj. The recommendation of this Committee was to tax agricultural income of rich.
However, the same was not made law. Similarly, eighty years ago Dr. B.D. Ambedkar
who was a man with towering personality and a great visionary and his view was that he
favoured taxing agricultural income with his sound reasoning. He was of the view that tax
should be levied on tax paying capacity or income of the tax payer and that rich must be
taxed more and poor less. It was Dr. Ambedkar who criticised land revenue by the British
Government as it was against the interest of the poor but according to him tax on agricultural
income should be levied. Later on the Taxation Enquiry Commission which was set up in
the year 1953-54 also recommended the revision of tax laws taking into consideration the
changes in the prices of agricultural produce.
Later on long term fiscal policy was introduced by the Government in the year 1985 and
they also recognized the concept of taxing agricultural income. In short the fact is that
almost all the commissions and agencies appointed or created by the Government in last
sixty years have unanimously been of the view that agricultural income should be subjected
to tax but the million dollars question is that who will bell the cat. The fact remains that
the law makers could not dare to taxing agricultural income mainly because of the vote
bank problem. It is at this point of time that when we are thinking of devising new vistas
and new means to gather finances for the development of the country the theme of taxing
agricultural income specially the rich agriculturists should be taken into consideration
and that it is high time now that the agriculturists be brought in the tax net. The Government
should make a study to bring agricultural income and non-agricultural income at par and
for this purpose the Government should also analyse that the overall hard work done by
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