Days after suggesting imposition of taxes on farmers, NITI Aayog has said that the matter was not included in the much-awaited three-year ‘Action Agenda’ because it undermines Prime Minister Narendra Modi’s push for doubling farmers’ income.
“As I have explained in several recent interviews, the Action Agenda does not recommend such a tax. Any such talk is in near direct contradiction of the Prime Minister’s push for doubling the farmers’ income. Moreover, by taxing farmers, we would be undermining the objective of food security,” its vice chairman Arvind Panagariya told The Economic Times.
Panagariya, a noted economist and a professor of economics at Columbia University, noted that the tax on agricultural income is a state subject and that the think-tank has ‘no agenda of us pursuing it with states’.
“What the CEA is saying is that the tax on agricultural income is a state subject. The Finance Minister has also made this point. But since such a tax is not a part of our Action Agenda, there is no question of us pursuing it with states. In our Action Agenda, there is a lot that states need to do and we will pursue those action points,” he added.
Last week, NITI Aayog member Bibek Debroy had called for widening the taxpayer base as he recommended that the farm income should be taxed as the same threshold as personal income.
Debroy had even suggested that exemptions on personal income tax should be removed to increase tax base from the current about 37 million (3.7 crore) in the country of 1.3 billion (130 crore) of people.
This had prompted an immediate reaction from Finance Minister Arun Jaitley who said that ‘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 tax on agricultural income,” he had said.
Prior to NITI Aayog’s recommendations, Chief Economic Adviser (CEA) Arvind Subramanian had suggested in the Economic Survey that taxing the well-off in the agricultural segment would help widen the taxpayer base.
Meanwhile, the three-year ‘Action Agenda’ of the Aayog, which was put in the public domain last week, has pressed for substantive reforms in labour laws to take the country out of the current low-productivity and low-wage jobs situation.
It has also said that unifying the existing large number of labour laws into four codes without reforming them will serve little purpose.
"Unless, we bring about substantive change either by amending the existing laws or rewriting them afresh, we can’t expect to change the current situation where low productivity and low-wage jobs dominate the landscape," the draft action agenda stated.
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