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No plan to tax agricultural income, rich farmers very rare: Arun Jaitley

LiveMint logoLiveMint 09-05-2017 Joyeeta Dey

Tokyo: Finance minister Arun Jaitley said the government has no plans to tax agricultural income, including that of rich farmers. A rich farmer, he added in an interview, is “very rare” and not the norm.

Jaitley added that the farm sector is in distress and there is no question of taxing agricultural income. In April, Niti Aayog member Bibek Debroy expressed the view that farmers should be liable to pay tax on their incomes at par with other citizens after adjusting for seasonality. “I have already said that we are not in favour of doing that,” Jaitley said on Tuesday.

The minister added that it did not make sense to “start taxing agriculture” at a time “when you need to support it because of (agricultural) distress.”

“In any case, the central government has no power (to tax farmers). It is the power of state governments (to tax farm income) and my own view is that none of the states is going to do it,” Jaitley said.

Niti Aayog vice-chairman Arvind Panagariya has also clarified that Debroy’s comments on taxing farm income were his personal views and not those of the government think-tank.

Speaking on the ordinance promulgated last week empowering the Reserve Bank of India (RBI) to take the lead in resolving the issue of bad loans and stressed assets, Jaitley said tackling non performing assets (NPAs) would take time adding that, with the law in place, banks have to get on with the job. “Already the ordinance has been approved. The authorisation has been given. RBI itself has come out with some guidelines. Some management changes have taken place (in state-owned banks). Now the next stage is that through the JLF (joint lenders forum ) mechanism, the resolutions should start and we do expect the banks to cooperate in making the JLF mechanism a success.”

The mechanism of JLF came into effect in 2014 with the intention of recognising stressed assets early and coming up with a corrective action plan (CAP) within 45 days. The system, however, did not work seamlessly as there were disagreements between lenders on how to move forward on individual accounts.

In response to a question on bringing down the government’s stake in state-owned banks, Jaitley said it is not the best time to do so. “So, let us improve their health and then we will do it,” he said.

He added that the government is looking to push ahead with consolidation of some state-owned banks, but declined to provide details. PTI

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