Published On : Mon, Mar 28th, 2016

VTA requests Govt to amend Seventh Schedule of Constitution

Suggestion to tax Agricultural Income above Rs.10 Lakh

Nagpur: From the records it is evident that annually lakhs of taxpayers earn handsome agricultural income, out of which 4000 to 5000 taxpayers earn agricultural annual income above Rs.1 crore. If these statistics are averagely considered, we can assume that in past 2 decades around Rs.2 Lakh Crore income has been brought on record as agricultural income and as there is no Income Tax on agricultural income, Government earned zero revenue on such income.

Taking this issue on priority Vidarbha Taxpayers Association (VTA) had dispatched memorandum to Pranab Mukherjee – President, Narendra Modi – Prime Minister, Arun Jaitley – Finance Minister, Atulesh Jindal – Chairman Central Board of Direct Taxes, New Delhi and Ajay Sancheti – Member of Parliament & Member – Standing Committee of Finance with request to bring High Agricultural Income earners under income tax bracket.

J. P. Sharma, president of VTA said that it is also quite possible that in such cases many could be of converting black money into white which are safely managed under the prevailing set of rules. Therefore it is highly recommended that high agricultural income taxpayers are brought under direct tax net so that tax base is increased and relatively good revenue will be generated by the Union Government on this new head. By doing so, those indulging in converting black money in white will also stop automatically and burden on existing taxpayers will slightly be relieved.

Tejinder Singh Renu, secretary of VTA said that for doing so, Union and State List as stipulated in Seventh Schedule under Article 246 of Constitution of India will have to be amended accordingly; since tax on agricultural income is covered in Sstate List at serial no. 46 – Taxes on Agricultural Income, however since state governments does not have any mechanism to tax agricultural income, the only way is to deleted Sr. No.46 from State List and amend Sr. No.82 of Union List, whereby Central Government can tax agricultural income routinely as direct tax through Income Tax Department.

Renu pointed out that the misuse of agricultural income has been highlighted before by the Tax Administration Reform Committee, led by Parthasarathi Shome, in its third report in November 2014, which had submitted that Agricultural income of non-agriculturists is being increasingly used as a conduit to avoid tax and for laundering funds, resulting in leakage to the tune of crores in revenues annually. While CBDT too have realised the same in white paper on black money released by it in May 2012.

Therefore it’s highly recommended that Agricultural Income earners above Rs.10 lakh annually should be taxed in order to collect legitimate revenue after amending Seventh Schedule of Indian Constitution suitably, thereby increasing tax base as well curbing easy available scheme of converting black money into white within framework of existing rules and regulations.