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Policy Options for the Taxation of Agriculture Land and Agricultural Income in India

Sebastian S. James

June 2004, English

This paper is a study of the policy options for the taxation of Agricultural Land and Agricultural Income in India at the levels of the Local, State and Central Government. This study has come to the conclusion that the continued under-taxation of the agricultural sector in India could lead to serious distortions and result in lower overall tax compliance. It has been therefore proposed that the taxation of all forms of income, including Agricultural Income, should be with the Central Government, while the taxation of Agricultural Land should be devolved to the Local Government at the District level. It has also been suggested that this tax on Agricultural Land should be converted to a simple Property Tax that can be easily implemented by the Local Governments. In supporting the recommended policy options and the rationale for increased taxation of agriculture, the author has drawn from his experience while working with the Ministry of Finance, Government of India and studies on Tax Reform by Academics and Committees of the Government of India and the State Governments.


Farm Land, Local Government, Property Taxation, Tax Reform