Why farmers are outside the Tax net? … Read this

It’s important to understand the situation of farmers in India from a certain perspective.

It’s often questioned as to why a farmer who earns in Lakhs and crores every year (crore earning farmers will be tips though) out of farming activities does not pay tax?

On the face of it, the question seems relevant. But on a closer look, there are reasons why he should not or why till now he’s not made to pay taxes (generally).

Farming is one business where the amount of inputs always surpass the output. I used the word business to placate those who want to call farming as a business activity. How one can say so? … This way. If the same piece of land is put to use in some other business activity or commercial housing, the returns and pure profits will be much higher than what a farmer gets from putting it under agriculture. To extend this logic further, treating farming as a pure business activity done for pure profits will mean that everything on your food plate will cost more.

That’s why farmers must not only be saved from taxes; they must also be given incentives to continue farming. Incentives in the form of rescuing them from risks from time to time. The very nature of India and its large population means that  farming sector must be bailed-out from time to time. This needs a few Lakhs of bailout packages after every crop cycle (boom and recession). If not done, 70 percent of the population will get directly affected as many food items from their food plate will go out of your reach. We need someone to grow food for us. Importing food is easier said than done.