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Report No. 49

2. Scope of the Report and questions for consideration.-

It should be made clear at the outset that the scope of the present Report is limited. The Report is not concerned with the merits of the proposal referred to above,1 nor with the details of the legislation which will have to be undertaken to give legislative effect to the scheme of taxation which would be made permissible by the proposal. To be precise, the questions which we consider in this Report are:-

(1) Whether under the Constitution, as it stands now, it is permissible for Parliament to amend the Income-tax Act, 1961, to provide that "total income" as defined in that Act will include "agricultural income" for the purpose of computing the rate of tax though no tax will be levied by the Centre on agricultural income.

(2) If the answer to the first question is in the negative, on what lines the Constitution would need to be amended to secure for the Parliament, without abridging the taxation powers of the State legislatures in respect of agricultural income, a limited power to legislate only for the aggregation of agricultural income with income on which tax is leviable under the Central Income-tax Act for the purpose of determining the appropriate rate of tax on non-agricultural income.

1. Para. 1, supra.

The Proposal for inclusion of Agricultural Income in the Total Income for the purpose of determining the Rat of Tax under the Income-Tax Act, 1961 Back

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