Daily Debates-Should there be tax on agricultural income?

Should there be tax on agricultural income?

Provide your inputs in the comment section below.

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By | 2016-05-21T09:02:06+00:00 May 21st, 2016|Daily Current Events|31 Comments
  • Imih

    Should there be tax on agricultural income?
    India is agrarian nation in terms of involvement of percentage of people in agriculture…Roughly 84% of people are marginal farmers, who do subsidence type of farming…The production for this bulk is marred by lack of capital to invest…So imposition of tax will severe their conditions…

    however, It will be right to impose the tax on large farmers….They have been at the recieving end when ever the governments had taken steps to improve agriculture.It will be apropos to mobilise their wealth to the poor farmers.

    • Decent attempt indeed.

      But please analyse the situation bit more and describe it in keywords of economics. This will make your analysis prudent, legit and impact full.

      Keep writing the more you will write the more you will improve.

      • Thank you Vivek for helping us out by giving reviews.We are glad that we have you here.

      • Imih

        Thanks sir

    • Good to see after a longtime.

      • Imih

        Myself pleased sir… 🙂

  • Imih

    Should there be tax on agricultural income?
    India is agrarian nation in terms of involvement of percentage of people in agriculture…Roughly 84% of people are marginal farmers, who do subsidence type of farming…The production for this bulk is marred by lack of capital to invest…So imposition of tax will severe their conditions…

    however, It will be right to impose the tax on large farmers….They have been at the recieving end when ever the governments had taken steps to improve agriculture.It will be apropos to mobilise their wealth to the poor farmers.

    • Decent attempt indeed.

      But please analyse the situation bit more and describe it in keywords of economics. This will make your analysis prudent, legit and impact full.

      Keep writing the more you will write the more you will improve.

      • Thank you Vivek for helping us out by giving reviews.We are glad that we have you here.

      • Imih

        Thanks sir

    • Good to see after a longtime.

      • Imih

        Myself pleased sir… 🙂

  • Mahi

    Plz review Sir

    • Impressive… 🙂

      try to write on unruled pages. Because in mains you will get unruled sheets. It is better to prepare for that 🙂

      Please review my answer and give your thoughts

    • As Vivek pointed out- very good indeed.Look at the above comment from us for few additional points..

  • Agriculture in India is largest employer. It provides employment for 55% of population but it has only 15% GDP. Agricultural income is not taxed in India because of politico-administrative reasons.

    In favor of agricultural tax:

    * Taxation of agriculture will generate resources for development of agri-infrastructure, value addition services and agricultural allied sector. This will improve the living standard of population engaged in agriculture.
    * Since agriculture income is not taxed. It has become a tool by which various small and micro business owner shows their excess income under income form agriculture head to evade income tax.
    * Easy way to convert black money in to white or legit money.
    * Large farmers who has very high income do not pay taxes and also hijack the resources meant for small and marginal farmer.

    In Against :
    * Agriculture is a state subject. Therefore it is highly unlikely to have a uniform tax rate or structure. This will reduce the competitiveness of farmers from high taxed state in national market i.e. e-NAM.
    * Most of the farmer in India is either small or marginal. Therefore if proper safeguard are not provided then enforcement and tax collection will be very exploitative (i.e. British India).
    * Administration cost will be very high due to non existent infrastructure for measurement of income form agriculture. Therefore net proceed will be negligible (as was in case of Wealth Tax).

    Therefore, government shall tax agriculture income in phased manner and with introduction of proper slabs likewise in Income Tax. Since agriculture is in dire need of investment therefore taxing agricultural income is need of hour. Gov. is about to introduce 0.5% agricultural cess on service tax to meet the investment need. Such measure will impact the poor, marginal and small farmer more because service tax is indirect tax and regressive in nature. Hence absence of tax on agriculture is not in favor of poor. Therefore, agricultural tax must be introduces in phased manner.

    • Good answer Vivek.Covers all the points.

    • Imih

      Agreed with you sir….
      But a point to mention why to ho for phased manner….
      I mean land holding of marginal farmers is becoming smaller ….(census)….so , will it be right to envolve at any time….
      My opinion it has to be fixed on large farmers…

      • I agree with you.. but how will you find who are large farmers ???
        I said phased manner because
        * Taxing agri income is Highly sensitive for political arena..
        * If you will go by phased manner lets say top 20% then those who are over reporting will try to find another venue to evade tax. After some time only legit one’s will remain in records.. At that time relevant institution will have any promising data to actually decide on slab rates.
        * Phased manner will also help to establish an institutional system to assess and scrutinize false or under reporting.

        Try to think like You are Chairman of CBDT and Narendra Modi asks you to tax on agri income… Then how will you start..

    • Mahi

      Nice points I would say…. Intro is good …

  • sowmya

    More than 80% of land holdings in India belongs to small and marginal farmers who don’t have adequate source of income for their investments leads to farmer’s distress with back to back droughts. In this scenario access to improved finance is a viable option. For such step to be effective, taxing agriculture income could be a better one .

    Positives:

    • credible tax returns helps the farmers to claim their earning potential, results in improved access to finance
    • Helps in raising bargaining capacity for farmers who can now have multiple sources for finance
    • helps in targeting the productive farmers from unscrupulous farmers
    • increased finance ensure better investments in agriculture which in turn promotes production

    On the flip side:

    • illiteracy among farmers may acts as obstacle in moving this step forward
    • high income for big farmers may acts attractive one for banks rather small farmers
    • poor infrastructure and high administrative cost for taxation may render the process unviable

    However as income tax returns provides sole credible source for poor farmers to claim their potential it is an affective step with adequate mechanisms for better targeting the sincere,productive farmers there by smoothens the movement of other ones to move towards manufacturing sector

  • sowmya

    More than 80% of land holding in India belongs to small and marginal farmers who don’t have adequate source of income for their investments leads to farmer’s distress with back to back droughts. In this scenario access to improved finance is a viable option. For such step to be effective, taxing agriculture income could be a better one .

    Positives:

    • credible tax returns helps the farmers to claim their earning potential, results in improved access to finance
    • Helps in raising bargaining capacity for farmers who can now have multiple sources for finance
    • helps in targeting the productive farmers from unscrupulous farmers
    • increased finance ensure better investments in agriculture which in turn promotes production

    On the flip side:

    • illiteracy among farmers may acts as obstacle in moving this step forward
    • high income for big farmers may acts attractive one for banks rather small farmers
    • poor infrastructure and high administrative cost for taxation may render the process unviable

    However as income tax returns provides sole credible source for poor farmers to claim their potential it is an affective step with adequate mechanisms for better targeting the sincere,productive farmers there by smoothens the movement of other ones to move towards manufacturing sector

  • sowmya

    More than 80% of land holding in India belongs to small and marginal farmers who don’t have adequate source of income for their investments leads to farmer’s distress with back to back droughts. In this scenario access to improved finance is a viable option. For such step to be effective, taxing agriculture income could be a better one .

    Positives:

    • credible tax returns helps the farmers to claim their earning potential, results in improved access to finance
    • Helps in raising bargaining capacity for farmers who can now have multiple sources for finance
    • helps in targeting the productive farmers from unscrupulous farmers
    • increased finance ensure better investments in agriculture which in turn promotes production

    On the flip side:

    • illiteracy among farmers may acts as obstacle in moving this step forward
    • high income for big farmers may acts attractive one for banks rather small farmers
    • poor infrastructure and high administrative cost for taxation may render the process unviable

    However as income tax returns provides sole credible source for poor farmers to claim their potential it is an affective step with adequate mechanisms for better targeting the sincere,productive farmers there by smoothens the movement of other ones to move towards manufacturing sector