• Kandivali West Mumbai 400067, India
  • 022 39167251
  • support@email.com
November 26, 2022

Can Income Tax be levied on agriculture income? Can govt amend Constitution?

by CA Shivam Jaiswal in Income Tax

Can Income Tax be levied on agriculture income? Can govt amend Constitution

As per the Constitution of India, the state government has the power to levy taxes on agricultural income.

The central government has no power to collect tax on agricultural income

Can Parliament amend Constitution and Tax Agriculture Income? A thread

In the history of modern India, agricultural income has been taxed by the central government under the Income-tax Act for just 13 years: from 1860 to 1873.

Almost 100 years later, Bibek Debroy, a member of the Niti Aayog – the Centre’s policy think tank – said that agricultural income should be brought under the income tax net.

The Chief Economic Adviser to the Government of India Arvind Subramanian also said that states can decide to tax agricultural income, but stressed the need to make a distinction between the rich and the poor farmer.

The Chief Economic Adviser to the Government of India Arvind Subramanian also said that states can decide to tax agricultural income, but stressed the need to make a distinction between the rich and the poor farmer.

One of the tasks before this Committee was to examine whether the power to tax agricultural income should lie with the Centre or the states.

In its report, the Expert Committee observed that it was “obvious” that the taxation agricultural income by the states, while all other income was taxed by the Centre, stood in the way of a “theoretically sound system of income-tax in the country.

The Committee felt that states would administer the tax with greater facility than the Centre, as they could take into account local conditions when drawing up the necessary taxing statute.

Their fears have now been realised more than six decades later, with a number of states not taxing agricultural income at all, leading to a huge loss in revenue.

As a result, the software engineer in Bangalore who meets the income threshold pays his taxes, while the wealthy farmer whose only source of income is agricultural pays absolutely nothing.

Can Govt Tax Agriculture Income ?

Govt needs to do is to introduce a Bill in Parliament to amend the Constitution and ensure it is passed by a two-thirds majority in both houses. The Bill must provide for the deletion of Entry 46 from the state list

The Bill will then need to be passed in the State Legislatures of at least 15 states, and if it clears this hurdle, it will be sent to the president.

If the government prevails before the Supreme Court, only then can it amend Section 10 of the income-tax Act, which exempts agricultural income.

The “agricultural income” path is misused by most politicians and the citizens sponsored by these politicians to turn their black capital into white money.

Implementation of an Agricultural tax on rich farmers earning more than 10 lakhs as profit/income is important in the present times as the agricultural sector has become a veil for hiding loads of black money.

Source

Enter your email address:

Subscribe to faceless complainces

Please follow and like us:
Pin Share
RSS
Follow by Email