BJP Meet Set To Reject Kelkar Panel Proposal To Tax Farm Income

New Delhi, December 22: | Updated: Dec 23 2002, 05:30am hrs
The Bharatiya Janata Party (BJP), at its two-day national executive meeting beginning on Monday, is set to reject the Kelkar panels recommendation of taxing agricultural income and also the removal of tax exemptions fulfilling socio-economic objectives including benefits available for housing.

The party is slated to concretise its views on the recommendations of the Kelkar panel on the basis of inputs provided by the Rajnath Singh committe on Monday. The task force on direct taxes headed by Vijay Kelkar, advisor to finance minister, has recommended removal of all tax exemptions barring a few along with overall lowering of the tax incidence, in its consultation paper released in November.

BJP sources told FE that Rajnath Singh Committee, set up by the party to study the recommendations of the task force, submitted its report on Saturday.

The views expressed at the party meeting will be accommodated in the report which will be submitted to the finance ministry for consideration during the budget-making process. Chief whip of BJP in Lok Sabha VK Malhotra, head of the economic cell PN Vijay, member of the prime ministers council on trade and industry Jagdish Shettigar, Lok Sabha MP Kirit Somaiya, Sushil Kumar Modi, Nikhil Ghatgare and YRK Reddy are the members of the committee.

BJP general secretary and committee chairman Rajnath Singh said, The report has not been rejected in toto. Certain recommendations of the report have been accepted while some have been rejected. Though the committee members declined to divulge specific suggestions, it has been learnt that the panel has favoured the recommendation of the task force on simplification of the tax structure and tax rate of 20 per cent for incomes between Rs 1 lakh and 4 lakh. The committee is of the view that the tax burden on the salaried, middle-class, women, and weaker sections of the society should not be increased.

Terming the panels proposal on taxing farm income impractical, a senior party leader said the NDA government did not have the requisite strength in Parliament to obtain clearance on controversial issues. Why should the party subject itself to oppositions criticism on this issue when it knows that implementing any proposal to tax agriculture is not possible, he said.

The Kelkar panel has proposed that a tax rental arrangement should be designed whereby states could pass a resolution under Article 252 of the Constitution authorising the central government to impose income tax on agricultural income. All taxes collected by the Centre (net of collection costs) would be assigned to the states, the panel has said.

A senior party leader said the Kelkar panels suggestion of a big-bang approach on removal of tax exemption is irrational and has been recommended taking into consideration only revenue aspects. He added that Rajnath committee has, however, unanimously suggested continuance of those tax benefits which are acting as a fiscal tool to fulfill socio-economic objectives including the ones available in the housing sector.