The comptroller and auditor general has initiated an audit of entities claiming tax exemption on agricultural income amid suggestions from some political parties and income tax authorities that a blanket exemption be done away with and tax be levied after a threshold.

The auditor has written to the finance ministry seeking details of entities which have declared agricultural income and the amount of tax exemption granted to them. Recently, tax authorities had raised concerns about possible misuse of the exemption available to agricultural income, although the government has clearly said that there was no move to impose tax.

Finance ministry data showed that nearly four lakh people declaring farm income had been granted exemption during 2013-14.

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Total agricultural income exempted from tax in 2013-14 was Rs 9,338 crore. The details were as per the list of those who had filed their returns till November 2014.

During 2013-14, the top 10 entities had claimed tax exemption of Rs 628 crore on their agricultural income and the list included multinational seed distribution companies. In fact, those declaring over Rs 1 crore agricultural income had come under the lens recently.