In a suggestion that may not go well with political leaders,industry chamber Assocham today urged the government to bring rich farmers under the ambit of income tax to increase revenue generation.
In a pre-budget memorandum to Finance Minister Pranab Mukherjee,the chamber has said the government should set up an expert panel for taxing the agriculture community to up to 20 per cent over a period of time depending on the income of individuals. Currently,there is no tax on agricultural income.
“We have requested the government to bring agriculture under the tax net. Nowadays,many corporates have gone into agriculture. Agriculture sector should be divested to increase revenue generation,” Assocham President Rajkumar Dhoot told reporters here.
He,however,said farmers with very less income should be spared from any taxes.
“Why should big farmers not be taxed? There is a tax exemption limit on income. If that is crossed,farmers should also be taxed,” Dhoot said,adding 80-90 per cent of farmers
are poor and should not be taxed.
The industry body has suggested that a farmer with up to 10 hectares of land should not be taxed at all,Dhoot said.
He said a farmer owning cultivated land of up to 20 hectares should be taxed at the rate of 5 per cent,while those having 20-50 hectares of land should be imposed 10 percent tax.
“Besides,large farmers having 50 hectares or more land should attract a tax of 20 per cent,” Dhoot said,adding in all cases,the productivity of the land should be taken into account while imposing any tax.
In their suggestion to the Finance Minister,Assocham said farmers should not be brought under the tax net immediately and an expert panel should be formed to see how farmers could be taxed over a period of time,he added.
Dhoot said by bringing the farming community under the income tax net,the country could generate an additional revenue of Rs 20,000 crore every year.
When asked about the political fallout of this suggestion and feasibility of its implementation,Assocham Senior Vice President Rana Kapoor said: “We know that politically it is a very sensitive issue. However,it is a progressive taxation
issue… I think there is a business case.”
Talking about food-subsidy,Dhoot said it should be given to “only needy people”.
“I fully support food security. We have suggested to the government that subsidy should be given to targeted people and should be reduced gradually keeping in mind their condition,” he added.