Need to tax agricultural income: NITI member

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SME Times News Bureau | 25 Apr, 2017
Noted economist and NITI Aayog member Bibek Debroy on Tuesday said there was a need to expand the tax base by bringing agricultural income under the tax ambit.

He said there was also a need to eliminate exemptions on personal income tax.

Talking to reporters here, Debroy said while the exemptions on personal income tax need to go, the "eventual answer to expand the tax base is to tax the rural sector, including agricultural income above a certain threshold.

"While only the agricultural income of farmers is exempt from taxation, their non-agricultural income also goes un-taxed," he said.

Asked what should be the threshold for taxing agricultural income, Debroy said it should be same as in the urban areas.

"I don't believe in the artificial rural-urban distinctions. So whatever is the threshold of personal income tax in urban areas should be for the rural areas as well.

"At best, what (we) can do is -- because it is agricultural income -- (we) can average it out over a three- or a five-year period instead of using income from one particular year... because agricultural income is subject to annual fluctuations," Debroy said.

"Barring that, the threshold should be the same."

During the press conference, NITI (National Institution for Transforming India) Aayog Vice Chairman Arvind Panagariya shared details of the draft three-year action plan proposed to replace the erstwhile Five-Year Plans.

Panagariya said that over the next three years, there was a need to tackle tax evasion, expand the tax base and simplify the tax system through reforms.