Statsguru: Sorting out farmers' incomes

Reportedly, Bibek Debroy suggested to tax agricultural income, which led to a public outcry

Over the past few days, India’s agriculture has received much public attention for two apparently contradictory concerns. The first issue was the possibility of taxing agricultural income. NITI Aayog member Bibek Debroy reportedly suggested this move for widening the tax base and pruning exemptions. However, this led to a massive public outcry and within a few days both the NITI Aayog and ministry of finance ruled out such a move. Beyond the political economy though, the data show such a tax would rope in a very small fraction of farmers into the tax net.

Chart 1 maps the distribution