India’s farms report income greater than our GDP! Target them in the war on black money

Discussion in 'Economy & Infrastructure' started by sthf, Nov 14, 2017.

  1. sthf

    sthf Senior Member Senior Member

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    The opposition is baying for the government’s blood over demonetisation and GST. The first is done and over with. But its effects are not yet over. The second has been modified to assuage large sections of the population.

    The government continues to insist that demonetisation will help curb black money. Maybe it will. The money that has been put into bank accounts (since very few of high value notes got ‘impounded’ or cancelled by the government) will help the government track down accounts which saw a surge in deposits. That will enable the tax authorities to track down the sources of these deposits.


    According to media reports, attributed to highly placed tax authorities, more than Rs 2 lakh was deposited in over 60 lakh bank accounts post-demonetisation. The total amount involved is over Rs 7.34 lakh crore. These accounts are now under scrutiny.

    8 lakh or 60 lakh?

    That may be so. However, there are good reasons to believe that the Finance Ministry could haul up bigger fish by just scrutinizing some 8 lakh accounts, instead of pursuing 60 lakh accounts.

    These are the people who submitted agricultural income tax returns in 2011-2013 (see chart alongside). Watch the table closely. The total number of returns filed and which showed agricultural income surged from 425,085 in 2011, to 656,944 in 2011. This number climbed further in 2012 to 812,426 in 2012.

    [​IMG]

    But more astonishing is the amount of money involved. Collectively, the amount claimed as agricultural income was Rs 84,742 crore (average amount per assessee Rs 19.lakh) in 2010. If that made you gasp, watch the amount declared for 2011. It jumped to (hold your breath) Rs 19,971,098 crore (Rs 3,040 lakh average per assessee) in 2011. It did not stop at this level. It climbed further to Rs 67,431,358 crore (average Rs 8,300 lakh) in 2012.

    The collective amount for the three years comes to an astounding Rs 86,486,197 crore (Rs 865 lakh crore). It is astounding, because the GVA (gross value added) for the country was only Rs 8,546,552 crore, Rs 9,084,369 crore and Rs 9,727,490 for 2010, 2011, and 2012, respectively. The total GVA for the three years together comes to Rs 27,358,411 crore.

    What this means is that the total agricultural income filed with the IT authorities was three times the total GVA for the three years. If only 2011 and 2012 are taken into account, agricultural income declared was almost 5 times the GVA for those two years. Preposterous! That effectively means that agricultural income was even greater than India’s GDP or GVA! Unbelievable!

    But that is what the numbers say. Some taxmen tried to pass this off as data-entry errors. But that is implausible. This is because any income over Rs 20 lakh has to be fed into the income tax servers directly by the assessees. If the figures are wrong, the assessees should be hauled up and penalised for wrongful entries. The entries should then be cancelled and treated as null and void. Else, they should be prosecuted and fined for concealment of income. Neither has happened. The Finance Ministry is silent about this. So are the income tax authorities.

    In fact, the income tax on such declarations could be large enough to account for almost 100 years of total taxes collected. That could actually make Prime Minister Modi’s plan for giving money back to tax payers a reality.

    The genesis

    The genesis of these discoveries lies in a series of accidents. The first figure that emerged was a mind-boggling amount of Rs 2,000 lakh crore. This was almost two and a half times the Rs 865 lakh crore given in the table alongside. This figure emerged in an affidavit filed by a retired Income Tax (IT) officer -- Vijay Sharma.

    He had filed an RTI (Right to Information) request with the income tax department for the amounts declared as agricultural income. He claimed that he had indicated an exponential increase in agricultural income from 2004 to 2013, touching a total of almost Rs 2,000 lakh crore for 6.57 lakh individual assessees in 2011. He then asked for the top 100 names of the people who had filed such returns.

    His RTI request was denied. He then decided to file a public interest litigation (PIL) petition with the Patna High Court in Bihar. This matter was duly reported by media in March 2016. The court was supposed to hear the petition in April in that year itself. But the courts, too, have been silent on this matter.

    Almost simultaneously, the income tax department gave out a different set of figures (see table 1) which was dutifully reported by the media.

    At the same time, thanks to the PIL before Patna High Court, the CBDT – on 10 March 2016 -- sent out a circular to all its officers to verify details (LETTER F.NO.DGIT(S)/DIT(S)-3/AST/PIL MATTER/AGRICULTURAL INCOME/97/2015-16) A copy of this letter can be downloaded here. It confirmed that there had been a surge in agricultural-income returns. It also attempts to suggest a way to wriggle out of this mess.

    And this brings us back to demonetisation. Remember, demonetisation involved just Rs 15.4 lakh crore. The total currency in circulation is under Rs 20 lakh crore. And Rs 865 lakh crore was many times these levels.

    Why agricultural income?

    Of course, the one question that automatically arises is – why is the focus on agricultural income so crucial? The reason is simple. Agricultural income is tax exempt, provided it is declared as agricultural income with the tax authorities. That has given rise to several theories. Someone possibly tipped off some of the most powerful people in India during 2010. Maybe, there was an amnesty scheme round the corner. Maybe, there was an assurance that no questions would be asked. But that is all pure speculation. But the numbers that appeared in the media, and through the tax authorities could not have been speculation. One cannot imagine the entire country getting into a speculative mood simultaneously, all of a sudden.

    The tax-free nature of agricultural income has made this the favourite method many politicians are said to use to convert their illegally gotten wealth into legitimate income. That is why agriculture is often referred to as a laundromat. Some of the politicians have disclosed figures that defy reasoning. Even if the most productive field were to be used for growing the most lucrative crop, incomes of those levels would just not be possible.

    Sadly, the income tax department – and the Finance Ministry – have kept silent on scrutinizing these returns. More painfully, even the judiciary has not asked questions. Had it done so, the PIL filed by Sharma would have been heard, and the truth would have come out. One way or the other, the ghost of huge agricultural incomes would have been put to rest.

    Strangely, even the opposition parties have chosen to stay quiet about this.

    I call this a collusive silence. Nothing makes sense for now.

    So we return to the question everyone has been asking. Will demonetisation root out black money? Maybe, yes. But only if the problem of agricultural income is addressed first.

    (The author is Consulting Editor with Moneycontrol)

    http://www.moneycontrol.com/news/bu...em-in-the-war-on-black-money-2437801.html/amp
     
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  3. sthf

    sthf Senior Member Senior Member

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  4. aditya10r

    aditya10r Mera Bharat mahan Senior Member

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    I am not shocked.

    Many farmers in my village own some big cars(safari, sumo, Bolero,xuv) and what not.

    But they don't have to pay any sort of income tax or they can evade easily.

    The farm loan waivers is nothing more than wastage of our taxes,loan of every farmer no matter how rich is waived off and they start fresh new loan of NPA.

    I strongly ask for land and labour reforms with proper compensation.
     
  5. Screambowl

    Screambowl Senior Member Senior Member

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    The country is dooming because of these things only.

    every one become ghareeb, lachar, pichwada , pichdawa what not ..and as a farmer he gets exempted from tax.

    If farmers starts paying even 5% of income tax, Indian GDP will touch 4 tril in 5 years.
    backward and farmer ke naam pe yeh log loan lety hai use agri culture ki jagah kahin or laga dety hai .. aur phir haye daiiya haye daiya..

    inke chakkero ki wajah se genuine farmer bhi mara jata hai...
     
  6. sthf

    sthf Senior Member Senior Member

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    Its not the phenomenon that shocked me, it's the scale. "Agricultural income" was always a great way to convert black into white but the figures mentioned in the article are truly messed up.
     
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  7. Bhumihar

    Bhumihar Jako Rakhe Saiyan Mar Sake Na Koi Senior Member

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    I know this very well no one in my village used to fill electricity bill back in the day now at least they are paying 3000 or something a year.
    Many farmers in my village have 2 or 3 bikes and cars literally, I don't know where all this money comes from.
     
  8. Screambowl

    Screambowl Senior Member Senior Member

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    60% of rural India is running on the slogan .. haye hum ghareeb haye hum ghareeb and paying for nothing.

    These pseudo ghareeb are actual the ones who eats the subsidy for the one who genuinely need it.
     
  9. Bhumihar

    Bhumihar Jako Rakhe Saiyan Mar Sake Na Koi Senior Member

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    But who will tell this to them, if any government tries to take action they are doomed
     
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  10. Screambowl

    Screambowl Senior Member Senior Member

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    apas mein ladwa do .....
    .............................................
     
  11. Flame Thrower

    Flame Thrower Senior Member Senior Member

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    Guys...I'd like to ask you to hold your guns....

    Is there anyone from farming background!?

    My grandparents (both) are... though they gave up, my mother's side gave up just before her marriage.

    Now, before we start, most of the farmers cultivate in 1 acre or less.

    My grandfather is a pathwari. In a village where over 2000 acres of land cultivated, only 20 families have land more than 10 acres and over 1000 families have 1 acre of land or less. He also owned 70 acres, but had to sell a lot due to famine, for education of children, for marriage of his daughters (6 of'em). Today he has none left, still has huge respect in village. If there is a conflict on land, people would come to take his suggestion. He is 94, yet very active.

    People who cultivate in an area of 5 acres or less need support. Over 5 acres, yes they might be abusing govt. policies.

    I have seen my share of farmers, most of my friends come from farming background.

    Thus I rest my case.
     
  12. aditya10r

    aditya10r Mera Bharat mahan Senior Member

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    There was a case of land acquisition that happened in my village some 5-7 years back so my memory is quite hazy.


    The farmers agreed to sell their lands for 10l per acre and a flat in the apartments built,soon after that they created ruckus and media was involved and the company had to go back.

    The total land acquired was some 10 acres and work was done on 3 acres only.The farmers threatened they would commit suicide if their land is not returned,the company returned the land but asked for the money.

    What they said-beta sir you have spoiled our land we need spend money to make it profitable,some even claimed that he spent that money on his daughters wedding.

    Yeh log koi dudh k Dhule nahi hain.
     
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  13. Screambowl

    Screambowl Senior Member Senior Member

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    They abuse and exploit so much of the policies that even your share goes to them. So these pseudo ghareebs need to be exposed.

    ghar baith yeh log kuch nahi kartey haram ki khatey hai aur hugtey hai.
     
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  14. Flame Thrower

    Flame Thrower Senior Member Senior Member

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    I don't deny what you said.

    In our state, Telengana...most of the farmers go for Cotton crops.

    If the Cotton crops grows then they'll rich (around 10 to 12 lakhs per acre) and if the crop fails for once, then in most of the cases families will be forced to hang themselves due to huge debts. Thess words come straight from my friend.

    I've met enough of'em. There are people who exploit, if you leave them, then a situation might force them to commit suicide.

    Things are getting better. I'd suggest that govt support all the farmers below 5 acres of land and its time to leave above 5 acres.

    In most cases, Middleman in the crop sales get benefited while the farmer and the common man face the losses. Till date, I haven't seen any policy that would sort this issue.
     
  15. Screambowl

    Screambowl Senior Member Senior Member

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    there won't be any policy because middle men fund elections too
     
  16. Nanjesh Patel

    Nanjesh Patel Senior Member Senior Member

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    Funny, I missed this discussion. Perhaps, I was inactive a few days back when this discussion was active.
    But, my two cents.

    My father is a farmer. He was an ex-cop, but he took a VRS to get into farming. We have more than 10+ acres (ancestral), will not be giving the exact no. due to probable hostilities due to misunderstanding of my comment/opinion.

    TBH, I am dead against loan waivers and subsidies. Infact, I had made a brief project report on how to better utilize the funds ending up in subsidies, but did not do anything after the report. Kept it with myself, perhaps now I will do the thinking of what to do next with it. Every year around ~4.5L crores end up in subsidies, and the majority not reaching the genuine people in requirement of these funds. These funds repeat every year too. Imagine, how much worth it would these very same funds be if they are actually invested in rural infra, i.e., cold storages, high class roads to connect them with markets, etc. And best of the fact is that it is a one-time investment apart from maintenance. These are the hallmarks of a good agricultural setup.
    Coming to loan waivers. It is more of a political issue rather than an economic one. Govt.'s think that if they waive loans, they can come to power again, with the support of the farmers, this thinking needs to be done away with. Once done, the farmers will expect their respective state govt.'s to do it at the end of every term, this is not good for the economy, esp. for a developing economy. No FDI will come in countries where socialism is practiced at this scale. IIRC, even Aus, backed off from Maharashtra recently after Fadnavis govt. announced and waived off loans.
    As I had said earlier, I have a 10+acre land, but trust me, it is not easy to maintain, I dunno much about others who maintain the same, but our agri income rarely goes beyond 7.5L a year, and add to it the expenses accrued - labor, electricity, etc.
    Yes, as a few had stated that black money is holed up in agri lands, but trust me, it will all come out, will not spoil the surprise by saying how. Just give it time.
     
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  17. aditya10r

    aditya10r Mera Bharat mahan Senior Member

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    Yes.

    That's what I say proper allocation is needed and deserving people should receive their fair amount.
     
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  18. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Out of the 150 million tonnes of produce India produces annually, 50 million of it spoils. I think that is a bigger problem than worrying about taxing the farmers whose products don't get sold.
     
  19. sthf

    sthf Senior Member Senior Member

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    Nearly all of it gets sold. Government buys it and then let it rot to hell.

    Problem is that a significant chunk of these "farmers" are not actually farmers. They are land owners from different financial and professional backgrounds like government officials, politicians, businessmem or just random middle class folks who offer their farm lands on lease to landless farmers in lieu of either fixed amount or as a profit percentage.

    This allows them to claim government benefits at the same time convert their illicit earnings as completely legal farm income since there is no way to ascertain the income. To oversimplify, a businessman can say that he has earned xyz percentage of his income of from his farms and therefore it is not taxable.
     
  20. HariPrasad-1

    HariPrasad-1 Senior Member Senior Member

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    Government must impose additional tax on all laxury items. Those who pays tax must be exempted from that tax and those who have not paid Income tax will pay this additional tax or agriculture income upto 10 lakh should be exempted from tax and on any other additional income, there should be a tax.
     
  21. 3deffect

    3deffect Regular Member

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    well pehle goverment se loan lo....phir DHARNA dekar goverment se bolo (farmers ka loan MAAF kro)..

    farmers sahe khel rhe hai BC.
     
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