There will be a Tax of 12% on agricultural revenue of 1.2 Million PKR.
Pakistani Farmers Face New Agricultural Income Tax. Pakistan’s $7 billion loan program with the IMF is expected in March 2025. Before that, Finance Minister Mohammad Aurangzeb has welcomed the decision of all four provinces to pass laws on agricultural income tax.
Under the $7 billions programme of Extended fund facility (EFF), International Monetary fund (IMF) has set a specific conditions for Pakistan, one of which is to impose taxes on the agricultural sector of Pakistan.
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How Much Tax will be imposed on agricultural income of a farmer:
According to the bills passed by the assemblies of Khyber Pakhtunkhwa, Sindh, and Balochistan, no tax will be applied on agricultural income up to 600,000 rupees per year. However, a 15% tax will be charged on agricultural income up to 1.2 million rupees. For incomes above 1.2 million and 1.6 million rupees, a fixed tax of 90,000 rupees will apply. For agricultural income above 1.2 million rupees, a 20% tax will be imposed.
For agricultural income between 1.6 million and 3.2 million rupees, a fixed tax of 170,000 rupees will be applied.A farmer who is earning above 3.2 Millions PKR a 40% agricultural tax will be applied.
Dr. Ikram Ul Haq explained how the tax policies of the provinces differ from each other. He mentioned that in Punjab, the provincial government will set the tax rates for each financial year. As he said, there are livestock income tax treatments variance across the provinces. For example, agricultural income in Punjab includes livestock kept for commercial purposes and is therefore taxed. However, in Khyber Pakhtunkhwa and Sindh, livestock income is not covered under Agricultural Income.
Dr. Ikram also said that there is a tendency in the provinces to apply the same methods of taxation as the federal government does in respect of income tax and corporate tax. Just as personal income tax has an exemption portion of 600,000 rupees, the income tax payable says agricultural tax also has some provisions of that nature. Likewise, the super tax on high corporate income is similarly transferred to agricultural taxation on big cultivation farms. Also, tax rates on small and large corporate companies are being imposed to corporate income tax.
Why imposing taxes on agricultural sector became so important:
The agricultural sector of Pakistan contributes 20% of all GDP however the tax imposed on this sector is less than 1%.
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