Letter: Tax adequately

The editorial, “An idea before its time” (May 3), brings up a number of issues and almost supports a move not to tax farm income. Taxing agricultural income is a complex issue because even though the income is legally attributable to the landowner, in practice several other people have a claim on the income. Thus, a plot with a single owner officially may earn Rs 5 lakh, but the land might have at least five other sharers in the family. This makes the process quite complicated.
 
Another logic for sparing agricultural income is unpredictable weather. A farmer, who would be taxed in a good monsoon year, might commit suicide in the following bad monsoon year. This would be grossly illegitimate as the farmer is being deprived the scope to bring back internal accruals of one good year to survive in the next bad year.
 
The other side is that tax-free provisions for agricultural income are abused to turn black money into white and to legitimise “double black money” such as bribes, smuggling profit and drug peddling. This section of taxpayers makes use of the provisions of non-taxability without having any agricultural income. They usually hold some agricultural land and make use of this landholding to wash dirty money. They should be taxed without mercy. This section includes politicians, film stars and bureaucrats.
 
Corrupt tax officials also play ball. The question is how does one detect these people, who show other sources of income in the guise of agricultural income and build capital to explain assets?
 
As a middle ground solution, taxpayers who have non-agricultural taxable income above Rs 10 lakh, should be taxed for their agricultural income also as a normal source of income. The agricultural income should be added back to non-agricultural income to arrive at the total income and taxed at normal rates. At present, the agricultural income is added back for rate purposes only. This would be simple and legitimate and devoid of any scope of rent seeking.
 
The editorial should have raised this issue and demanded a white paper on the amount of agricultural income, which is being included in the income tax returns of these taxpayers. It could have thrown light on the level of ingenuity to wash dirty money in the guise of agricultural income. Even in drought years, these returns show a healthy flow of agricultural income.

                Deba Pratim Ghatak   Durgapur
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