New Delhi [India], May 12 : A Public Interest Litigation (PIL) filed before the Delhi High Court on Tuesday is seeking directions to the authorities to consider legislative and policy measures for taxation of high-income agricultural earnings in the National Capital Territory of Delhi.
The petition, filed argues that the continued blanket exemption granted to agricultural income from taxation has resulted in fiscal inequality and arbitrary classification among taxpayers. It contends that despite the constitutional framework permitting states to levy tax on agricultural income, no effective steps have been taken in Delhi to regulate or tax such high-income agricultural earnings.
According to the plea, the continued exemption is arbitrary, discriminatory and violative of Articles 14, 38 and 265 of the Constitution of India. The petitioner has claimed that while salaried professionals, traders and other citizens remain within the tax framework, a narrow class of high-income individuals allegedly continues to remain outside the taxation system through agricultural income exemption.
The petition further seeks the invocation of powers under Section 22(1)(a) of the Government of National Capital Territory of Delhi Act, 1991, for placing the issue before the competent authority and initiating consideration of appropriate legislative measures.
Referring to the constitutional scheme, the plea states that Article 246, read with Entry 46 of the State List, empowers states to levy taxes on agricultural income, while Entry 82 of the Union List excludes agricultural income from the Union's taxation domain. It argues that the Delhi government possesses the legislative competence and authority to enact laws or frame policies relating to the taxation of agricultural income within its jurisdiction.
The petitioner has alleged that the failure of the respondents to take legislative or policy measures has resulted in fiscal imbalance and unequal treatment among taxpayers.
The plea has sought directions to the respondents to actively consider and formulate suitable legislative or policy measures to regulate alleged misuse of the agricultural income exemption and ensure fairness and equity in the taxation framework.
The petition also traces the historical background of taxation on agricultural income, stating that the first Income Tax Act introduced in British India in 1860 included agricultural income within the tax net, but the Income Tax Act of 1871 later excluded it from taxation due to administrative and political considerations. It further refers to the Government of India Act, 1935, which placed taxes on agricultural income within the Provincial List.