Ahead of the Union Budget, a Parliamentary panel on Friday suggested taxing agricultural income, bringing all non-essential services under tax net and revamping export promotion schemes to check tax evasion and widen tax base.
"With reference to persons having income from both agricultural and non-agricultural income, perhaps the time has come for the government to seriously consider fixing, in consultation with state governments, a threshold limit beyond which, the income of such persons from agricultural sources could be brought under the tax net," the standing committee of finance said in its report tabled in Parliament.
The committee in its final report on widening the tax base expressed concern over tax evasion by people involved in non-agricultural activities such as trading in rural areas and suggested discouraging private money lending.
Observing that the contribution of service sector to tax revenues was disproportionate compared to the contribution to the GDP, the panel said all services, barring essential and basic ones, should be brought into tax net in one go.
The panel also recommended making a separate law for service tax, with clear definition of service components so as to avoid possible disputes between the Centre and state tax authorities and prevent double taxation of the same instance under state VAT as well as service tax.
Headed by BJP's B C Khanduri, the committee has former finance minister Yashwant Sinha, Venkaiah Naidu and Left leaders Gurudas Dasgupta and Chittrabrata Majumdar among its 31 members from Lok Sabha and Rajya Sabha.
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