NITI Aayog moots taxing agriculture income

Government think-tank NITI Aayog has suggested that agriculture income be brought under the purview of personal Income Tax in a bid to curb tax evasion.

Key Facts

  • At the Governing Council meeting, the Aayog reasoned that non-agricultural entities sometimes use the blanket relief to evade taxes.
  • All agricultural income is currently exempted from Income Tax regardless of its size.
  • While the provision is meant to protect farmers, non-agricultural entities sometimes use it to evade taxes by declaring agriculture as the source of their income.
  • This would widen the tax base and more funds could be made available for the social sector schemes.

Background

In assessment year 2014-15, only 3.65 crore individuals filed returns. Of this group, only 1.91 crore individuals or around 1.5% of the population paid any Income Tax at all. So we should endeavour to bring a large number of citizens into the direct tax net even if their tax liabilities are minimal.There were about 225 million households in India of which roughly 2/3rd were in rural India. Rural India, he said, was effectively out of the purview of all personal income taxation.

Source : The Hindu

GS II : Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

 

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