Agricultural Income Tax in India: Introducing Threshold-Based Tax Exemption

Published date01 March 2022
Date01 March 2022
Subject MatterArticles
Agricultural Income
Tax in India: Introducing
Threshold-Based Tax
Naveed Trumboo1
Agricultural income earned by a person in India is exempted from taxation as
far as the Income Tax Act, 1961 is concerned. This article explores the case for
introducing threshold-based Agricultural Income Tax (AIT) exemption in India.
The article examines this proposal using the existing literature and body of work
available on the subject. The study comes to the conclusion that the existing
blanket exemption on agricultural income is undesirable from the perspective
of fiscal policy and principle of equity. It is suggested that a reasonable monetary
threshold should be defined above which agricultural income will be subject
to taxation at the national level. The findings indicate that such a measure will
increase revenues, check tax evasion and widen the tax-base in the country. It has
also been proposed that AIT should be implemented by the Central government
at the national level, and the local government authorities must also be involved
for information collection and monitoring at the ground level. Finally, the study
suggests some policy strategies to implement and administer threshold-based
AIT in India.
Agricultural income tax, f‌iscal policy, tax evasion, direct taxes
Mobilising resources through appropriate fiscal policies is one of the key priori-
ties of governments in all countries. In developing nations, these resources are
needed not only for promoting economic growth but also for dealing with other
Indian Journal of Public
68(1) 21–33, 2022
© 2022 IIPA
Reprints and permissions:
DOI: 10.1177/00195561211058451
1 IRS Off‌iicer posted as Deputy Commissioner of Income Tax in New Delhi, India.
Corresponding author:
Naveed Trumboo, IRS, Off‌ice of Principal Chief Commissioner of Income Tax, New Delhi-110002,

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