New Delhi, Apr 28: Chief Economic Adviser Arvind Subramanian today said that states, which have the option to levy tax on agricultural income, should make a distinction between rich and poor farmers. With this CEA Subramanian joined the debate on taxing agriculture income. He further said that there is no such law which prevents the state government from levying tax on agricultural income. However, he also clarified that it is only the Central government which cannot tax agricultural income, as per the Constitution.
Subramanian also stressed that there is a need to make a clear distinction between poor and rich farmer. This comes at the background of the recent debate which began after NITI Aayog member Bibek Debroy suggested that agricultural income should be taxed as well. Though later Finance Minister Arun Jaitley stated that there is no such proposal as the Central Government has no power to impose tax on agricultural income. However, in this Subramanian’s alternate solution is nonetheless important.
“The legal situation is…nothing prevents state governments from taxing agriculture income. The constitutional restriction is on central government taxing agriculture income. Subramanian said. “There too, one could make a case that this is a choice open to 29 state governments and if there are willing takers, all power to them,” he added.
Emphasising that a discourse of farmer’s does not just include poor farmers, he said, “Why is it that it is very difficult to make a distinction between a poor farmer and a rich farmer… When you say farmer, people think that you are going after the poor farmer.
“So what is it about political discourse that does not allow these distinctions to be made. Why can’t we say, rich regardless of where they get their income, should be taxed,” he said.
(With inputs from PTI)