Former Revenue Secretary Tarun Bajaj pitches for tax on agri income | The Financial Express

Former Revenue Secretary Tarun Bajaj pitches for tax on agri income

People have also filed about 500,000 updated returns, Bajaj, who superannuated last month, said.

Former Revenue Secretary Tarun Bajaj pitches for tax on agri income
At present, agricultural income is exempt from tax under the Income Tax Act. The topic is also seen to be highly politically sensitive as it would impact farmers.

Former Revenue Secretary Tarun Bajaj on Thursday made a case for taxation of agricultural income and suggested that people above the income tax threshold must pay tax, irrespective of their income source.

“It is a good thought… If I make more money than the threshold, I should pay tax,” said Bajaj at a CII conference, but added this is his personal view.

At present, agricultural income is exempt from tax under the Income Tax Act. The topic is also seen to be highly politically sensitive as it would impact farmers.

Meanwhile, addressing the session on “Mobilising Higher Tax Revenues for Financing India’s Development”, Bajaj also said he is not in favour of hiking tax rates but instead, advocated that the tax base should be expanded. “There is no need to increase tax rates,” he stressed.

Citing tax filing data, he noted the a little over 110 million people pay some kind of income tax in India of which just 70 million file returns.

“I don’t think we can be comfortable with the situation where 40 million people who pay taxes do not file returns,” he said, adding that the department has been using IT to nudge people to pay more taxes. “Notices have started going wherever there was a mismatch,” he said.

Also Read: India “increasingly viable” investment destination: EIU

People have also filed about 500,000 updated returns, Bajaj, who superannuated last month, said.

“If we can take these measures and expand the base of the pyramid, it will bring in more tax revenue,” he said, adding that increasing the tax rate will only increase the burden on the people who already pay tax.

His comments come ahead of the Union Budget 2023-24. There are expectations that the government will consider various measures to increase tax revenue, which had remained subdued due to the Covid-19 pandemic and economic slowdown.

Bajaj said direct buoyancy was at 2.5 last fiscal and should be about 1.7 this fiscal. The collections from the goods and services tax is also expected to increase by about 23% to 25% this fiscal, he said. Bajaj also flagged concerns over the Base Erosion and Profit Shifting Project and said that Pillar One could pose to be a contentious issue even though 141 countries have signed on it.

“It is only when the West gets hurts, it’s a problem. We were criticised on Vodafone and Cairn…Now that the West is suffering, this has become a major issue,” he said, noting that Pillar Two will actually get implemented much faster. The OECD/G20 BEPS framework aims to cut down on shifting of profits by multinational companies to low or no tax jurisdictions.

According to the OECD, Pillar One would re-allocate some taxing rights over MNCs from their home countries to the markets where they have business activities and earn profits, regardless of whether they have a physical presence there.

Pillar Two would put a floor on competition over corporate income tax, through the introduction of a global minimum corporate tax rate of 15% that countries can use to protect their tax bases.

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First published on: 09-12-2022 at 01:15:00 am
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