India-Agricultural Taxation

Agricultural property and some agricultural income were being taxed in the early 1990s, but the revenue from these taxes was negligible. In the early 1950s, however, land revenue agricultural property taxes were a significant form of government income, providing just under 10 percent of the tax revenue of the central, state, and union territory governments. At the end of the 1980s, that proportion was less than 1 percent because land revenue had been fixed. For instance, land revenue was an average of Rs28 per hectare in Kerala and Rs23 per hectare in Uttar Pradesh, the two states with the highest assessment rates. The national average was Rs16.50 per hectare. Agricultural property also was subject to stamp duties and registration fees. (All property transactions have to be made on official, stamped forms, and registration fees have to be paid to register transactions.) No data were available in early 1993 on the proportion of these fees that came from the agricultural sector, but a taxation inquiry committee put it at approximately 20 percent. Between 1950 and 1990, only about 1.5 percent of the total taxes collected by the central, state, and union territory governments came from the agricultural sector. Overall, the impact of tax on agricultural property was negligible but was a likely target for economic reform in the mid-1990s.

Since the 1950s, agricultural income tax has been collected as a federal tax, but it has been levied only on income from plantations. All other agricultural income has been exempt from tax. The total collection from this tax was less than 1 percent of the total taxes collected by the central, state, and union territory governments in FY 1950; in the late 1980s, it had dropped below 0.3 percent.

Data as of September 1995