Re-igniting the debate on the politically sensitive issue of taxing agriculture income, Chief Economic Adviser (CEA) Arvind Subramanian on Friday said that states have no constitutional restriction on taxing farm incomes.
The suggestion from the CEA comes days after Finance Minister Arun Jaitley clarified that the Centre had no plans to tax farm income, but not before adding that he couldn’t since the Constitution had authorised only state governments to tax agriculture.
"The legal situation is nothing prevents state governments from taxing agricultural income. The constitutional restriction is on central government taxing agricultural income," Subramanian told reporters on the sidelines of the annual session of the Confederation of Indian Industry (CII).