Farm income can't be 'escape route' for black money: Par panel

A Parliamentary panel today voiced concerns over the rise in the number of cases with Rs 1 crore plus as farm income post demonetisation and said the government must be vigilant to ensure that black money is not converted into white under the garb of agriculture income.
The report of the Standing Committee on Finance, headed by senior Congress leader Veerappa Moily, presented in the Lok Sabha said it has taken note of the sudden surge in the number of cases with Rs 1 crore plus agricultural income and were not satisfied by the "adhoc" manner the Revenue Department was handling such an important issue.

It said farm income should not become an escape route for unaccounted money holders in the wake of recent demonetisation action on old Rs 500/1,000 notes as well as changes in tax laws, and government need to be vigilant to curb such activities.
"Such a lapse or overlooking would ultimately lead to creation of 'domestic tax haven' in our economy whereby unaccounted or black money may be stashed/hidden under the head/guise of agricultural income," it said.
It has recommended the Ministry to take stringent action to check this trend and also asked for an update on the matter in one month's period.

The panel has also asked the Finance Ministry to furnish factual position in the matter to it within a period of three months from the presentation of the report to Parliament.

The Standing Committee on Finance report said it was alarming that 'data entry error' has been noted as foremost reasons behind the significant and ever growing cases of one crore plus agricultural income, as reported by the assessing officers.
It reflects poorly upon the functioning of the Department of Revenue that such data entry errors occur involving huge amounts of income, the panel said.
"The Committee would like to issue a caveat to the Ministry of Finance that in the light of recent denometisation and subsequent tax amendments undertaken by the government, strict vigil should be kept and stern measures be taken to prevent agricultural income from becoming an escape route for unaccounted money holders," the panel observed.

It asked the Ministry to enquire all such cases concerning reporting and assessment of agricultural income and fix responsibility in the matter.
Among others, on the matter of widening tax base, the Committee said if the Revenue Department wants to be fair to the honest taxpayers, they should figure out a way to eliminate or at least minimise exemptions faster.