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Will Narendra Modi Chase Black Money In Agriculture?

IndianMoney.com Research Team | Updated On Friday, March 09,2018, 04:10 PM

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Will Narendra Modi Chase Black Money In Agriculture?

 

 

 

Agriculture is the backbone of our Nation. Agriculture contributed 17% towards India's GDP in FY 2015-16. More than 50% of our citizens still depend on agriculture for their livelihood. The Government is encouraging agriculture in India, as it keeps food inflation low. Farmers being large in number, are a powerful support to any political party in India.

No political party dare anger farmers. In fact most political parties, bend backwards to solve their problems. Take a look at farm loan waivers in various states in India. The Uttar Pradesh Government promised a farm loan waiver of a whopping Rs 36,000 Crores. Farm loan waivers could cost Punjab, a massive Rs 10,000 Crores. More than a million farmers in Maharashtra will get the benefit of farm loan waivers. The Karnataka Government has waived off Rs 8,165 Crores in farm loans.

There's more...Agricultural income is tax free in India. But, agricultural income needs to be declared with the tax authorities. Now here's the problem. Politicians are using agricultural income to hide or convert illegal wealth into legitimate income. Black money is being hidden in agriculture. Will Narendra Modi chase black money in agriculture?

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Will Narendra Modi Chase Black Money In Agriculture?

 

You must be wondering how black money is hidden in agriculture. Politicians declare illegal wealth as agricultural income. Many politicians have declared so much in agricultural income, that even if the most productive fields were used to grow the most lucrative cash crops...Figures wouldn't match.

 

How is black money hidden in agriculture?

 

If you want to evade taxes and convert black money to white, all you need to do is show ownership of ancestral property in villages. You then obtain fictitious receipts from traders in agricultural commodities. This will be used to show evidence that you have produced and sold agricultural produce.

Take this instance of a powerful politician who owned apple orchards in Shimla. Till 2009, the orchard gave annual profits of just Rs 10 - 15 Lakhs. In 2012, a revised ITR was filed, showing earnings from the orchards over the last 3 years, to the tune of a whopping Rs 6.5 Crores. The IT department investigated and found that apples were transported on motor cycles and oil tankers to non functional Mandis. The apples were sold to unknown Companies with fictitious addresses.

 

SEE ALSO: How To Calculate Agriculture Income Tax?

 

Why should the Government chase black money in agriculture?

 

The Government demonetized Rs 500 and Rs 1,000 notes on November 8th 2016 to destroy black money in India. After demonetization, over Rs 2 Lakhs was deposited in more than 60 Lakh bank accounts. This is a whopping Rs 7.34 Lakh crores. All the Government needs to do is scrutinize 8 Lakh out of the 60 Lakh bank accounts. This could be where illegal income is hidden as agricultural income.

Take a look at these figures. The amounts claimed as agricultural income in 2010 was Rs 84,742 Crores. In 2011 it was Rs 1,99,71,098 Crores. Yes...an absurd figure....In 2012 it was Rs 6,74,31,358 Crores. An unbelievable figure....

Lets add up the amounts claimed as agricultural income in 2010, 2011 and 2012. It is Rs 8,64,86,197 Crores.

Let's compare these figures to India's GVA or Gross Value Added. For those who don't know, GVA gives the rupee value of goods and services produced in the economy - the cost of inputs and raw materials used in the production of these goods and services.  

Let's add up India's GVA in 2010, 2011 and 2012. It is Rs 2,73,58,411 Crores.

These figures show that the total agricultural income, filed over 2010, 2011 and 2012 is three times India's total GVA over the three years. So India's agricultural income was greater than India's GVA....Ridiculous Isn't it....

 

SEE ALSO: Should PM Modi tax the rich farmer?

 

Should India Tax Rich Farmers?

 

Studies have shown that a tax on agricultural income will not affect most farmers. Out of India's 9 Crore agricultural households in the year 2012-13, the average annual earnings were just Rs 77,000. This means even if agricultural income is taxed after accounting for the rise in annual earnings over the last 4 years, it would be well below the Rs 2.5 Lakh tax exemption limit.

If the Government were to tax just the top 4% of agricultural households, it could collect Rs 25,000 Crores in taxes. This would discourage politicians and other rich citizens who are hiding black money in agricultural income. Be Wise, Get Rich. 

 

 

 

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