New Delhi: Finance Minister Arun Jaitley on Thursday warned of action against those passing off income from other sources as agriculture income but ruled out levying any tax on farm earnings.
Replying to the discussion on the Finance Bill 2016 in the Lok Sabha, he also ruled out withdrawal of the 1 per cent excise duty on non-silver jewellery, a demand that was made by opposition Congress and ruling NDA constituent Shiv Sena.
The Minister said the government will act tough against those found to holding illegal offshore accounts as revealed in the Panama Papers leak under the recently passed stringent black money law.
In his hour-long reply, the Minister dwelt at length on the challenges facing the Indian economy and said the government will work to resolve the NPA problem of banks.
After the reply, the House passed the Finance Bill that marks the culmination of the three-stage budgetary process in the Lok Sabha. The Bill will now go to Rajya Sabha.
“There are two categories. One is honest agricultural income. You may have a large income which is a separate case.
That is a rare case. But there are some cases where people are passing off income from other sources as agriculture income.
That is a case of evasion. That will be dealt with under the law. That the assessing officer can deal with,” he said.
Jaitley said there was no proposal to tax agriculture income. “This cateogry of people earning from agriculture in crores is very little. In any case, please remember, under the Constitution of India, the Centre has no power. It is a State subject.”
The remarks assume significance in the context of a recent discussion on the issue in Rajya Sabha where Jaitley had warned Congress leaders not to cry political vendetta if he were to disclose those hiding other income as agri income.
Ruling out roll back of one per cent excise duty levied on non-silver jewellery, Jaitley took jibe at the Congress for its hatred for “suits” but love gold.
“I am unable to understand this politics, this economics where you hate suits but are in love with gold,” he said adding the duty was not targeted at small traders and artisans but would be levied only on jewellers with Rs 12 crore turnover in a year. .
Jaitley said while prosecution has been launched in the HSBC list where Rs 6,500 crore of undisclosed assets had come to light, and the Lichtenstein list.
Also, Rs 4,000-4,250 crore had been disclosed under the foreign blackmoney law.
Besides, through assessments another Rs 71,000 crore of blackmoney had been unearthed, he said.
On the Panama Papers leak, he said tax notices have gone to all the names of those holding offshore accounts that have been disclosed and action will be taken against those illegally parking money abroad.
Jaitley attacked the 1997 voluntary disclosure of income scheme (VDIS) as the “most ill-advised” as it allowed undeclared asset holders to pay just 30 per cent tax without any penalty or interest on the 1987 value of gold and jewellery.
“They came out with the most ill-advised VDIS… It was an amnesty scheme. They said that if you are declaring gold and jewellery in 1997 that gold and jewellery would be valued at the price of 1987 and that is why I called it ill-advised.
“An amount of Rs 33,000 crore was declared and about Rs 9,700 crore of tax was paid. No new money came into the system, no cash came into the system and most of the declarants were women and minors,” he said.
VDIS was challenged in the Supreme Court as tax evaders were being given the facility of paying tax at 1987 value in 1997.
“If you honestly pay your taxes, you will pay at the current value. If not, you will pay at 10-year-old rupee value. This scheme could have been struck down as discrimination against honest tax payer but for the fact that the then government gave assurance to the Court that no future amnesty scheme would be brought,” he said.
Jaitley said the Budget for 2016-17 has provided for a scheme to deal with domestic blackmoney where undeclared assets can be legalised by paying 30 per cent tax and an equivalent amount of penalty.
To settle disputes, the Budget proposed 45 per cent tax instead of regular 30 per cent for income that may have escaped assessment. Also, to companies facing retrospective taxation, an option has been given to them to pay principal amount and interest and penalty would be foregone.
The Minister said this year 33 taxation officers including 7 belonging to Group A were compulsorily retired and 72 including 6 of Group A dismissed.
“Discretion of officers is not the only thing being reduced but action was also being taken against them,” he said.