According to Economic Survey 2016-17, there is 5.38 crore personal income taxpayers in the country. They reported gross annual income in excess of 18 lakh crore for the financial year 2013-14.
In contrast, over 4 lakh taxpayers claimed exemptions on their income from agriculture the same year. A total of 2,746 farmers reported an annual income of Rs 1 crore. None of them paid income tax on earnings from agriculture.
Had they been taxed, the government could have collected revenue of Rs 9,338 crore in 2013-14. This figure is based on the income declared by those farmers, who filed their tax returns by November 2014.
NSSO DATA MAKES A STRONG CASE
Consider another data from the 70th National Sample Survey Organisation (NSSO): Based on the size of landholdings, around 70 percent farmers are classified as marginal farmers with the farm size of less than one hectare. About 3.7 percent of farmers have landholdings of 4-10 hectares while 0.4 percent agriculturists have farms of over 10 hectare-size.
The NSSO figures show that the total annual agricultural income (from cultivation and livestock) stood at Rs 4.16 lakh crore against the total gross value added (GVA) from agriculture, forestry and fishing for 2013-14 which was Rs 19.02 lakh crore.
The total income of those with landholdings of over 10 hectares reported agricultural income of Rs 16,084 crore. If the agricultural income of those with landholdings of 4-10 hectare is taken into account, the income of top bracket farmers stood at Rs 83,433 crore for 2013-14 fiscal.
At an average income tax rate of 30 percent, bringing top 4.1 percent of super-rich farmers in income tax net in the Union Budget 2018, Finance Minister Arun Jaitley may be able to raise Rs 25,000 crore as revenue.
Here is the data:
CORPORATES TAKE BENEFIT OF I-T LAWS
Among those claiming tax exemptions from agricultural income are not only farmers but also big multinational companies. In 2013-14, top ten companies claimed income tax exemptions of Rs 628 crore.
The top earner was Kaveri Seeds, which claimed an income tax exemption of about Rs 187 crore and recorded profit of Rs 216 crore. Similarly, Monsanto India claimed tax exemption of Rs 94 crore, McLeod Russel India of Rs 73 and Vandana Farms and Resorts of Rs 61 crore.
Other top agriculture companies, which claimed income tax exemption, were MP Rajya Van Vikas Nigam (Rs 63 crore), Karnataka Forest Dev Corp (Rs 53 crore), Ankur Seeds (Rs 28 crore), Nath Bio-Genes (Rs 27 crore), Shivshakti Bio-Tech (Rs 22 crore) and Ganga Kaveri Seeds (Rs 20 crore)
PARKING LOT FOR BLACK MONEY
In many cases, agriculture has been used as parking lot for the black money. An I-T probe into former Himachal Pradesh Chief Minister Virbhadra Singh’s disproportionate assets revealed that till 2009, his apple orchards reported an annual income of Rs 10-20 lakh.
But in 2012, the tax returns were revised to show an income of more than Rs 6 crore over three years. The Income Tax department interpreted it as parking of black money in apple orchards.
The NITI Aayog too has been of the view that agricultural income should be brought in income tax net. The farmers enjoy subsidised or free electricity and irrigation, subsidised seeds, fertilizers and all agricultural equipment. But the real beneficiaries are the top bracket farmers due to their size of landholdings.
There have been suggestions that the marginal and medium farmers should continue to get subsidies and exemption from income tax as they are the ones who face a financial crunch. The super-rich farmers should be brought in income tax net not only to widen income tax base, which is very dismal for India compared to other big economies but also to check parking of black money in agriculture.