New Delih, April 29, 2017

Reviving the debate on the politically sensitive issue of taxing agriculture income, chief economic adviser (CEA) Arvind Subramanian said on Friday that states have no constitutional restriction in taxing farm incomes.

"The legal situation is (that) nothing prevents state governments from taxing agriculture income. The constitutional restriction is on the central government taxing agriculture income," Subramanian told reporters here on the sidelines of the annual session of the Confederation of Indian Industry (CII).

"There too, one could make a case that this is a choice open to 29 state governments and if there are willing takers, all power to them," he said. The CEA also stressed on the need to make a clear distinction between rich and poor farmers.

Earlier this week, finance minister Arun Jaitley said the government had no plan to impose any tax on agricultural income.

 "I categorically state that the central government has no plan to impose any tax on agriculture income," Jaitley said in a tweet, clarifying that the Centre has no constitutional authority to tax agricultural income.

[The Times of India]