The government has no intention to tax agricultural income, finance minister Arun Jaitley said on Thursday, responding to demands by some members of Parliament to tax rich farmers and firms that seek exemptions despite earning crores of rupees in profits from agriculture.
“It is not the centre’s intention and neither is its intent (to tax agricultural income). The centre has no power. It is a state subject. We will even advise states that they should not levy this tax,” he said in his reply to the finance bill in the Lok Sabha.
In the finance bill debate on Wednesday, politicians had sought to touch the third rail of Indian politics—taxing agriculture. Two MPs—Bhartruhari Mahtab of the Biju Janata Dal and Saugata Roy of the All India Trinamool Congress—made a case for, at the very least, taxing firms that claim exemptions on agricultural income despite earning crores in profits.
Mahtab went a step further and sought a tax on rich farmers who own more than 50 acres of land and whose agricultural income exceeds Rs.1 crore.
The Economic Survey, the government’s annual publication preceding the budget, also made a case for the taxing agricultural income of the well-off.
However, Jaitley did not subscribe to this view.
Referring to those taxpayers, who declare agricultural income of more than Rs.1 crore, he said, “This category of people earning in crores is very little. One category is honest agricultural income. Those are rare cases. There are some instances where income earned through other sources is being passed off as agricultural income. The income tax officials are aware of this and are taking action.”
He added that the current state of Indian agriculture does not warrant any such tax.