Income tax exemption on agriculture income has done less good and more harm to Indian farmer

By Daya Sagar
Some surveys have said that four of every ten of the India’s farmers disliked farming, and would prefer another occupation if given a choice.According to the Agriculture Census, the total number of operational holdings in India numbered 138.35 million with an average size of only 1.15 hectares. Of the total holdings, 85 per cent are in marginal and small farm categories of less than 2 hectares. Expressing concern over the sustainability of small farms, Union Agriculture Minister Radha Mohan Singh had said on February 13, 2016, while speaking at the national convention on challenges in agriculture and future strategies for sustainability at Jabalpur that 91 per cent of the total farm holding would belong to small and marginal farmers by 2030. That is ‘what’ the politician managed Indian economy has given to Indian farmer over last 7 decades under the slogans of ‘Jai Kisaan’.
A very large majority of the farmers in India are small and marginal farmers, often working on landholdings that are less than one hectare or maximum between one and two hectares.Nearly 57.8 per cent of India’s rural households are engaged in agriculture. Of them, over 69 per cent possess or work on marginal landholdings, and 17.1 per cent, on small landholdings i.e 86.1 per cent farmers owning lands are small & marginal farmers ( owning lands less than 2 hectares ) .
It is not out of place to mention here that about 72.3 per cent of India’s rural households work as either small cultivators or agricultural labourers in the agriculture sector as per the latest Census of 2011 i.e about 63 Cr Indian population ( 2011).So, there is all reason to ask who gets benefitted due to income tax exemption for agriculture income ?
With the present costs of production even a farmer who individually owns 8 to 10 hectares ( 20 to 25 Acres of agricultural land,there number may be around just 0.7 per cent as per 2011 data and there too income may be shared by even more than one person) , what to talk of less than 2 hectares ( less than 5 acres), will not have net agriculture income of Rs.300000 <60Yrs – 350000 <80Yrs>60Yrs Lakh per annum i.e Rs.25000 to Rs.29000 per month after deduction of all input costs and hence will not come in the income tax bracket.
To quote going by the information released by Commission for Agriculture Costs and Prices Deptt of Agriculture & Cooperation Ministry of Agri GOI in its reports even a farmer of Punjab where the crop yield could be taken as high as 50.17 Qtls / hectare for wheat ( 2013-14) and 38.38 qtls/ hectare for Paddy(2014-15) going by the respective minimum support prices (MSPs) fixed for wheat ( 2013-14) and paddy ( 2014-15) ie. Rs.1400/ qtl and the respective costs of production { C2= All actual expenses in cash and kind incurred in production by owner+ rent paid for leased-in land + imputed value of Family Labour and interest on value of owned capital assets (excluding land) + rental value of owned land (net of land revenue) } as Rs 1123.58/qtl for wheat (2013-14) and Rs. 1266.28/qtl for paddy ( 2014-15) the annual income of 85 % of the cultivators ( small and marginal farmers owning less than 2 Hectare i.e 5 Acres of land ) would have been just around Rs. 37900 and even that of farmers owning 10 to 20 hectares of land ( 25 to 50 acres ) it might have been just from Rs.2 lakh to Rs.4 lakh . The income upto nearly Rs.3 Lac per annum ( after savings like PPF, insurance, bonds etc) is exempted from income tax as per the present tax slabs and even for net income from 3 to 5 lakh per annum the tax rate is just 5 per cent. So, hardly any farmer in India would come under the income tax bracket at present standards.Instead there have been regular demands for waiver of outstanding bank loans of the farmers and reports are there about the farmers committing suicide under adverse economic pressures.
So, under the present status the rural agriculturist families/ cultivators are living under false impressions that the politicians of India do care for them and have hence exempted the agriculturists from payment of income tax. Where as the fact is that all politicians have kept income tax exemption on paper just to exploit the rural voter and have done very less to increase the real income of rural india.
In case the agricultural income is brought under income tax , a very large majority of indian farmers / cultivators with not be loaded with any additional tax burden, rather it will add to the income of the government because many who take unfair advantage of the exemption on agri income will not be able to evade income tax payment .
So, it is also high time for the agriculturist families / rural india to ask the government for withdrawing the income tax exemptions and instead demand from the government reduced indirect taxes , reduction in cost of farm inputs and provisions like quality education & health cover at the village level. Politicians have so far took refuge for their failures on these accounts under the ‘umbrella’ of “income tax exemption” and regular promises of “bad loan waivers” for agriculture sector on ‘election eves’.
(Daya Sagar is a Sr Journalist and a social activist [email protected] 9419796096)