Undeterred by the raging row stoked by his comments, NITI Aayog member Bibek Debroy is sticking to his guns that agricultural income should be taxed and says that the onus for this must be on the state governments. “I had said that agricultural income should be taxed above a threshold. I also said it’s a state subject and it’s up to the states to do it. That was my position then and that is my position now,” Debroy told IANS in an interview maintaining that there was no contradiction between his views and those of Finance Minister Arun Jaitley.
His remarks on April 25 raised the hackles of political parties including the MPs of the ruling BJP who criticised Debroy’s views saying such economists were not in touch with reality and did not know the problems of farmers. The very next day, Jaitley stepped in to douse the fires by clarifying that the central government had no plans to impose any tax on agricultural income as it did not have the constitutional authority to do so.
“The Finance Minister also said it is a state subject and the centre has no plans to tax agricultural income. How is it a contradiction to what I have said,” Debroy wondered. He added that even Chief Economic Adviser (CEA) Arvind Subramanian’s remarks were in line with his statement. Subramanian had on April 28 restoked the debate when he said that nothing prevented state governments from taxing agriculture income as the constitutional restriction was only on the central government.
Debroy also said that agricultural income was already being taxed in seven to eight states, including Assam, Kerala, Maharashtra, Orissa, Uttar Pradesh and West Bengal. He, however, added there may be cases where they taxed only “a certain kind” of agricultural income, “but they do tax it”.
“Half the people who are creating this controversy don’t even know that the issue of taxing agricultural income is being debated in India since 1953-54… People complaining about implementation don’t even know there is a K.N. Raj committee report from 1972-73 called Taxation of Agricultural Wealth and Income, which talks about implementation issues.” “They don’t know there was a Kelkar Task Force report in 2002 which estimated that if you use the existing threshold, 95 per cent of the farmers will be below it,” Debroy said.
The media was “unnecessarily trying to manufacture a controversy”, he added. The NITI Aayog member said that there were 307 individuals who declared agricultural income of more than Rs 1 crore ($156,000) during fiscal 2014-15, alluding but not saying so in as many words, that something wasn’t right here.
Debroy also noted there was also a company which had a profit of Rs 215 crore and yet claimed exemption worth hundreds of crores as its income was from agricultural sources. “Now how is it reasonable to say that they should not pay taxes?”
Last week after Debroy first made the remarks, NITI Aayog said in a statement that his suggestion to tax agricultural income was neither the view of the Aayog, nor it was part of the Draft Action Agenda document conceived by the planning body. “NITI Aayog has already told you that my views are not the views of the action plan. Therefore, the action plan’s views are not my views also,” Debroy said.