"Agriculture is our wisest pursuit, because it will in the end contribute most to real wealth, good morals and happiness.”
Yes, there can be no life on this planet without agriculture. When your ancestors started farming, it was the beginning of civilization. Agriculture is very important for the growth and sustenance of our country. Can you and other citizens live without eating rice, tomatoes, potatoes, dal and all those lovely vegetables?
The Consumer Price Index (CPI) or retail inflation was 3.81% for the month of March 2017. Retail inflation in India was quite low in previous months, but is steadily rising. The culprit? Rising food prices.
This news should frighten you. Karnataka faces the worst drought in 40 years. Farmers in Karnataka say we have never seen such a drought. All our crops are destroyed. Farmers in UP have demanded and got farm loan waivers. Now, farmers in Tamil Nadu, Maharashtra and several other states are demanding farm loan waivers. As farmers suffer crop losses, shouldn't you be frightened?
Yes, the agricultural income of the poor farmer should not be taxed. What about the rich farmer? Want to know more on tax planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com website. IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and capital markets
1. Food prices are rising in India
You and other citizens want to live in cities. Many of our fellow citizens are leaving villages and migrating to cities. Who is left to grow crops? As more and more youth migrate to cities, agriculture is no longer the profession of choice. Imagine if you and other citizens are no longer interested in growing crops? What will you eat? If agricultural income is taxed in India, would not the prices of food grains and vegetables go sky high? Will the poor be able to afford food?
Yes, agricultural income should not be taxed in India, but should agriculture be used as a tool to evade taxes?
There were whispers in India, Perhaps the Government was planning to tax agricultural income. The Finance Minister Arun Jaitley had to issue a clarification....Government will not impose any tax on agricultural income.
The saying goes...No politician dare tax agricultural income. This is political suicide. Farmers are a very large vote bank and no politician wants to anger them. Many politicians own agricultural land in India. Any black money they make can easily be hidden as agricultural income. Why would politicians allow agricultural income to be taxed?
1. The corrupt escape tax through tax exemptions on agricultural income
Just 3% of Indians pay tax. This is in a nation of more than a Billion citizens. Agriculture contributes 16 - 17% of India's GDP. Imagine if the Government can tax all this agricultural income? Poor citizens like you and me would have no headaches. Then there are Companies which deal in seeds and biotech. All these Companies enjoy tax exemption on agricultural income.
What agricultural income will a poor farmer earn? Anyway...It's going to be below the minimum income tax slab. So who really enjoys the tax exemption on agricultural income?
It's the rich farmer, the politician and the corrupt who deal in black money. If you are corrupt and want to evade taxes, all you need to do is show ownership of ancestral property in a village. You then obtain fictitious receipts from a trader in agricultural commodities. These receipts are evidence that you have produced and sold agricultural produce. In very much the same way, the corrupt escape paying taxes on black money. Do you think this should happen?
A corrupt politician who owns agricultural land can easily inflate the agricultural produce and pass off unaccounted money (black money from illegal sources) as agricultural income. Should he enjoy a tax exemption on agricultural produce?
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2. PM Modi should look to tax rich farmers and Companies
Many rich farmers and seed and biotech companies use the agricultural income exemption route to save taxes. Perhaps, the Prime Minister should look to tax the agricultural produce of farmers owning land beyond a certain threshold. Why should big companies escape paying tax?
Rich farmers in villages are very powerful and control a lot of votes. Only a very brave politician can take them on.
Yes, agricultural income of the rich and the corrupt must be taxed. The Government needs to first tax agricultural income from plantation crops. This is easy as there are large scale operations, records of accounts and earnings are deposited in banks. The tax money collected can be used for the development of agriculture in India. Tax payers would be very happy if they get tax deductions on purchase of seeds, tractors and agricultural equipment. This can be the way forward. Be Wise, Get Rich.
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