BJP against taxing agricultural income

Wednesday, 29 January 2003, 08:00 Hrs
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NEW DELHI: The Bharatiya Janata Party (BJP) Tuesday strongly opposed the proposal of a government-appointed taskforce to tax agricultural income.

"The party is totally opposed to the idea of imposing tax on agricultural income," said the report of a BJP panel headed by former Uttar Pradesh chief minister Rajnath Singh that was set up to review the recommendations of the Kelkar committee.

The Kelkar committee, headed by adviser to finance minister Vijay Kelkar, had suggested a slew of radical measures including lowering corporate and personal taxes to rationalise the tax structure and boost government revenue.

The recommendations of the committee, which was set up six months ago to prepare a roadmap for sweeping reforms, are likely to be part of the budget for fiscal 2003-04 to be presented on February 28.

The committee has suggested agricultural income should also be taxed and revenues collected be passed to the states. Currently, farm income is exempt from tax as it is a politically sensitive measure.

"The time is not opportune to think about agricultural tax. Before that, the agricultural sector should be provided with adequate infrastructure facilities with reform measures in the sector," said the BJP report.

"Till the farmer is able to determine the price for his product in the same way as a manufacturer, treating him on par for tax purpose should not arise," it added.

Analysts say with the BJP, which heads the ruling coalition at the centre, gearing up for polls in key states this year and a general election next year, the opposition to taxing agricultural income was expected.

The BJP, however, said it doesn't support "tax evasion by non-farmers showing their income from predominantly non-farm activities as farm income.

"This problem could be tackled by the pro-active, vigilant and strict tax department but not by taxing farmers."

The party has also opposed the Kelkar committee's recommendation to remove deductions in respect of interest on housing loans, saying the boom in the housing sector has led to the revival of steel and cement sector and the rest of the economy.

"The BJP is opposed to the proposal to withdraw tax incentives on housing loans, especially when the government has kept a target of 10 million houses to be built during the five years period," the report said.

The party has also urged the government to continue with tax rebates on small savings. "The relief under section 80L has benefited hundreds of thousands of small investors. The party is of the view that this should be continued."

The BJP endorsed the Kelkar committee's suggestion to remove tax on dividends, saying it would encourage small investors and give a much-needed fillip to investment.

The party has also supported various measures recommended by the Kelkar committee to simplify and modernise tax administration to widen the tax net and ensure better collections.

"The party is convinced that with these measures, the ordinary tax payers will benefit specifically in terms of services and also the efficiency of the tax administration will certainly be improved," said the BJP report.
Source: IANS
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