New Delhi, September 3: In a bid to stop money laundering and tax evasion in the name of farm income, the Modi government may soon target rich farmers by dismissing blanket exemption on agriculture income and levy a threshold instead. At least the latest move by CAG to seek details of rich farmers from Finance Ministry indicates so.
According to TOI, the comptroller and auditor general (CAG) has initiated an audit of individuals claiming “tax exemption” on “agricultural income.” The step seems to be in success of suggestion of income tax officials to government to cease the blanket exemption on farm income.
While the government has clearly said that there was no move to impose tax on farmers yet. But the possibility can not be ruled out as CAG has not initiated such audits in the past. It is not the performance audit but the clear indicative of segregating entities who have been making crores under farmers’ tax exemption slab.
The step by CAG also puts a scanner on government’s intentions on being “unnecessarily vindictive” for detecting tax evasion, after the successful collection of Rs 30,0000 crore taxes from income declaration scheme 2016. Though FM Arun Jaitely had said recently, “authorities would not be unnecessarily vindictive but carry out normal activity of detecting tax evasion,” the current step can not be termed normal activity.
Earlier the tax authorities had raised concerns about possible misuse of exemption available to agricultural income.
According to data released by Finance ministry total agricultural income exempted from tax in 2013-14 was Rs 9,338 crore and nearly 4 lakh people used the farm income exemption benefit.
During 2013-14, the top 10 entities had used tax exemption of Rs 628 crore on their agricultural income. The list majorly comprised of multinational seed distribution companies. Those declaring over Rs 1 crore agricultural income also came under the lens recently.