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The recommendation of the Institute of Chartered Accountants of India in its pre-Budget memorandum to the Finance Minister to tax the income on agriculture is a well-founded one (Business Line, January 9). In his recent observations, the Finance Minister had indicated that he would give priority to agriculture.

There can be no doubt about the necessity to attend to this vital sector, but it should be noted that taxing agricultural income and providing budgetary support to agricultural sector are two different things.

While not taxing the small and marginal farmers is justified, there is no rationale for exempting the wealthy farmers with large holdings since the inputs to farming are heavily subsidised. Further, modern farming technology enables the agriculturists reap rich harvests.

As pointed out by the ICAI, agricultural income should not be allowed to be a route to tax avoidance by showing taxable income as agricultural income and the recommendations made by the ICAI in this regard are quite valid.

Since the issue is politically-sensitive, tax rates can be lowered compared to other segments.

The recommendation of the ICAI to treat all corpus donations as income in the hands of charitable trusts need to be examined with caution since a number of charitable institutions providing services to the needy poor depend upon donations.

T. R. Anandan

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