Preparations have been completed to impose a tax on agricultural income in Sindh, following Punjab and Khyber Pakhtunkhwa, sources said on Sunday.

A draft law for the agricultural income tax has been prepared, which would be presented in the Sindh Assembly after approval from the provincial cabinet. It is expected to be approved in the assembly session scheduled for today (Monday).

The law will be titled the ‘Sindh Agricultural Income Tax Act 2025.’

It is proposed that no tax would be applied to agricultural income up to Rs600,000 annually, sources said and added that for agricultural income between Rs600,000 and Rs1.2 million, a tax rate of 15% would be imposed.

If approved, a tax rate of 20% would apply to agricultural income between Rs1.2 million and Rs1.6 million while a 30% tax would be levied on income ranging from Rs1.6 million to Rs3.2 million.

A 40% tax is proposed on agricultural income ranging from Rs3.2 million to Rs5.6 million while a 45% agricultural tax is proposed on income exceeding Rs5.6 million annually.

There would be “no super tax” on agricultural income between Rs10 million and Rs150 million. But a 1% super tax would apply to agricultural income between Rs150 million and Rs200 million.

For agricultural income between Rs200 million and Rs250 million, a two per cent super tax would be levied, and a three per cent super tax would apply to income ranging from Rs250 million to Rs300 million.

Moreover, the draft stipulates a 4% super tax on agricultural income between Rs300 million and Rs350 million and a 6% super tax for income between Rs350 million and Rs400 million. Similarly, an 8% super tax would be imposed on agricultural income between Rs400 million and Rs500 million while a 10% super tax would apply to income exceeding Rs500 million annually.

PPP takes party’s MPAs into confidence over agricultural tax implementation in Sindh

The Sindh-ruling party has taken the Pakistan Peoples Party’s members of provincial assembly into confidence over the agricultural tax implementation in the province, sources said on Sunday.

The development comes amid pressure from the federal government over increasing tax revenue.

Legislative preparations for the agricultural tax in Sindh have been “finalised.”

Sindh Chief Minister Murad Ali Shah updated the parliamentary party on the legislation regarding the agricultural tax. A meeting was held at the Chief Minister’s House on Saturday where participants were informed that the implementation of the agricultural tax was “necessary” to meet the conditions set by the International Monetary Fund. It was also clarified during the meeting that both Punjab and Khyber Pakhtunkhwa have already enacted similar legislation concerning agricultural taxes.

In September, the IMF’s Executive Board approved a new $7 billion, 37-month loan agreement for Pakistan that requires “sound policies and reforms” to strengthen macroeconomic stability. The approval released an immediate $1 billion disbursement to Islamabad.

The crisis-wracked South Asian country has had 22 previous IMF bailout programs since 1958.

A cabinet meeting has been scheduled for tomorrow (Monday) at the CM’s House where the legal draft regarding the agricultural tax would be reviewed and approved. A formal legislation would be presented in the Sindh Assembly following cabinet approval.

Sources added a tax would also be applied to agriculture and associated livestock nationwide, with the agricultural tax rate in Sindh expected to range from 15% to 45%.

PPP MPAs expressed their concerns and opinions to the party leadership, however, there has been “significant pressure” from the federal government on the Sindh government regarding the matter.

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The Punjab cabinet approved the agricultural tax on November 14 while the Khyber Pakhtunkhwa cabinet did so on January 27. Preparations are under way to implement this law in Sindh as well.

According to economist Kaiser Bengali, agriculture should be further taxed but the data, available to him, showed that 80 per cent of farmers were small farmers who do not fall in the tax net. The rest are big landlords, which are in small numbers, he said.

“So the total number is very small. Even if you tax all of them fully, the total revenue will not be large. You will have tax, but the revenue will not be large because the number of taxpayers will not be large. The big landlords are not even 1,000,” he said while appearing on Spotlight with Munizae Jahangir aired on Aaj News on July 8, 2024.