Agricultural Income Tax Row Reaches Delhi High Court

The Delhi High Court on Wednesday dismissed a Public Interest Litigation (PIL) seeking the imposition of taxes on agricultural income in the National Capital Territory (NCT) of Delhi, observing that taxation is a matter of legislative policy and not within the judiciary’s domain to mandate.

A division bench headed by Chief Justice D.K. Upadhyaya rejected the plea, describing it as “highly misconceived” and clarifying that courts cannot direct governments to enact tax laws.

The PIL, filed on January 31, 2026, had urged authorities to consider legislative and policy measures to tax high-income agricultural earnings in Delhi. The petitioner argued that the blanket exemption granted to agricultural income has resulted in fiscal inequality and arbitrary classification among taxpayers.

According to the plea, salaried employees, traders, and professionals remain subject to taxation, while a select category of individuals allegedly escapes the tax framework through the agricultural income exemption.

The petition contended that the continued exemption violates Articles 14, 38, and 265 of the Constitution of India by creating unequal treatment among citizens. It also sought invocation of powers under Section 22(1)(a) of the Government of National Capital Territory of Delhi Act, 1991, requesting authorities to place the matter before the competent legislative body for consideration.

Referring to the constitutional scheme, the plea highlighted that Article 246 read with Entry 46 of the State List empowers states to impose taxes on agricultural income, while Entry 82 of the Union List excludes agricultural income from the Union government’s taxation powers.

The petitioner argued that despite possessing legislative competence, the Delhi government had failed to frame laws or policies regulating agricultural income taxation, resulting in fiscal imbalance and alleged misuse of the exemption system.

The PIL also traced the historical background of agricultural income taxation in India. It noted that the Income Tax Act of 1860 under British India initially included agricultural income within the tax net. However, the Income Tax Act of 1871 later exempted such income due to administrative and political considerations. The plea further referred to the Government of India Act, 1935, which placed taxation on agricultural income within the Provincial List.

During the hearing, the court reiterated that the decision to impose or exempt taxes falls squarely within the policy-making powers of the legislature and executive. The bench refused to interfere, emphasizing that judicial directions cannot compel the State to formulate taxation policies.

With these observations, the Delhi High Court dismissed the PIL.

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