NITI Aayog member Bibek Debroy today made a strong case for removal of exemptions on personal income tax and bringing agriculture under the tax net with a view to increasing the resources of state. The effort, he said, would widen the tax base and more funds could be made available for the social sector schemes. “On the personal income tax side also exemption should go … On expanding the base on the personal income tax side, other than elimination of exemptions, is to also tax rural sector, including agriculture income above certain threshold,” Debroy said in a press conference.
On the threshold of imposing income tax on rural sector, he said it could be decided after taking into account the average income of either three years or five years. “I don’t believe in artificial distinction of rural and urban, so whatever is the threshold on personal income side on urban side, should be the exactly same on rural side.
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“At best what I can do because it is an agriculture income, instead of using agriculture income for one particular year, what I could do is I average it over three-year period or may over five years period as agriculture income is subject to annual fluctuations, barring that threshold should be the same,” he said.
NOTE: Clarification on news reports regarding NITI Aayog’s Draft Three Year Action Agenda, published on 26thApril, 2017
Several newspaper reports published on April 26th, 2017, state that NITI Aayog or its Draft Three year Action Agenda has recommended that Farm Income in India be taxed to expand the existing Income Tax base. The NITI Aayog categorically states that this is neither the view of the Aayog nor is such a recommendation made anywhere in the Draft Action Agenda document as circulated to the Governing Council at the meeting on 23rd April 2017.
NITI Aayog notes that the views on Taxing Farm Income expressed by Member Shri Bibek Debroy were personal and not those of the Aayog.