A parliamentary panel has recommended the finance ministry to consider implementing different tax codes for varying levels of agricultural income. The aim is to differentiate between those with only agricultural income and those with both agricultural and non-agricultural income for tax purposes.
The panel emphasizes the need for this distinction to identify potential cases of tax avoidance and money laundering. It notes that the agrarian community encompasses diverse groups, including small farmers and corporate entities, with 80% falling into the small and marginal categories. In the 2020-21 assessment year, 2.1 crore individuals reported agricultural income in their returns, out of which 59,707 declared income exceeding Rs 10 lakh. The finance ministry undertook verification of 3,379 cases, including those with agricultural income below Rs 10 lakh.
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The panel recommended the categorization of agricultural income into three slabs above Rs 10 lakh, Rs 50 lakh, and Rs 1 crore for better targeting high-risk cases and preventing revenue leakage. Moreover, it suggested providing tax officers with standard operating procedures to verify claimed agricultural income for exemption.