Government has no plan to impose any tax on agricultural income, clarifies Arun Jaitley

By: | Updated: April 26, 2017 1:32 PM

Finance Minister on Thursday made it clear that the Central government doesn't plan to impose any tax on agricultural income.

Earlier this week, government’s think-tank Niti Aayog proposed in its draft three-year action plan that Agricultural income should be taxed at the same threshold as personal income.

Finance Minister on Thursday made it clear that the Central government doesn’t plan to impose any tax on agricultural income. “I have read the paragraph in Niti Ayog Report entitled ‘Income tax on agriculture income’. To obviate any confusion on the subject, I categorically state that the Central Government has no plan to impose any tax on agriculture income. As per the Constitutional Allocation of Powers, the Central Government has no jurisdiction to impose a tax on agricultural income,” he said in a press statement.

Niti Aayog also made a clarification today regarding the think tank’s three-year action agenda which was published in several newspapers. “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 BibekDebroy were personal and not those of the Aayog”.


Earlier this week, Niti Aayog member Bibek Debroy said, Farm income could be assessed for tax as a three-year average. 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.

“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.

Niti Aayog’s draft plan was unveiled to states at the third governing council meeting on Sunday. It replaces the decades-old five-year plans and hopes to transform the planning process in the country.

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