The Hindu Business Line : 'Bring farm I-T under Union List'

THE Institute of Chartered Accountants of India (ICAI) has suggested that the power to tax income from agriculture could be put in the Union List and the Central Government may be empowered to levy and collect the tax on agricultural income. Agricultural income is currently taxed by the States and not by the Centre.

In its pre-budget suggestions for widening the tax base and increasing tax revenue, the ICAI has also recommended an exemption limit of Rs 3 lakh a year (for agricultural income only) to ensure that small farmers are spared and only high income earners are brought into the tax net.

ICAI council has held that the agricultural segment of the economy, consisting of a large number of wealthy agriculturists, should contribute to the national exchequer.

``The founding fathers of the Constitution assigned the power to tax agricultural income to the States in the pious hope that they, being close to the areas of operation of agriculturists, would effectively collect large revenue for development purposes. However, this expectation appears to have been belied,'' the ICAI pre-budget memorandum for 2004-05 said.

The ICAI has highlighted that many persons offer huge agricultural income for income-tax returns and that there is no mechanism to verify whether such income has been taxed under the relevant State law.

``Hence, the time has come that the power to tax income from agriculture be put in the Union List and the Central Government should levy and collect the tax. Of course, the revenue can ultimately be distributed among the State Governments,'' the ICAI has said.

ICAI, which is the regulator for the accountancy profession, has also suggested that persons transferring immovable properties should be required to file return of income under the provision to Section 139(1). To give relief in respect of low value transactions, the ICAI has recommended that a minimum limit of Rs 5 lakh may be prescribed.

Further, all persons carrying on notified professions (accountancy, film industry,engineering, law, medicine, interior decoration, architecture, company secretaryship, technical consultancy and authorised representatives) should be covered by the mandatory requirement of filing returns, irrespective of the income earned or the loss suffered.

A suggestion has also been made to the effect that persons booking international air tickets should be required to give their permanent account numbers (PAN) while booking such tickets. ICAI has said that airline companies should include such information in the annual information return, under Section 285BA.

ICAI has also recommended that all persons paying electricity bills amounting to more than Rs 25,000 annually should be required to file returns. The information on payment of electricity bills exceeding Rs 25,000 a year, should form part of the annual information return, the institute has said.