Agri income tax: really, are we serious?
In Punjab it was based on holdings and maximum rate Rs 500 per acre for holdings exceeding 50 acres.
The rate of tax on income was similar in both the provinces with 15 percent of income for income exceeding Rs 4.8 million.
In the amended law of Sindh this minimum tax being tax based on land has been omitted. This means that now there is no minimum tax on any agriculturalist based on land holding.
In Punjab in the amendment Act 2024 it has been stated in the Act that a schedule shall be provided in the Punjab Agricultural Income Tax Rules. There is a reference of two types of taxes being those on the basis of holding and income respectively. These rules have now been prescribed where this new rate of 45 percent and super tax is there. However, there is no reference of minimum tax on land holding.
Agri income tax: really, are we serious?—I
The writer is almost firm that this is a policy measure, if so then it may be called the biggest intellectual fraud that has been done in Pakistan. This means that our decision makers are either highly incompetent or they intentionally befool the people by introducing a statute which is practically non-implementable and effectively reduces the liability and ultimate collection of taxes. The writer would go for the first option.
Though exact date to this effect is not available; however, it is almost certain that the whole amount (over 95%) of agriculture has been collected by minimum fixed tax which was levied under the First Schedule to the Agriculture Income Tax Act 1997 which has been omitted by the Act in 2024 and Sindh Agricultural Income Tax Act 2025 respectively.
This means that now there is no tax on a per acre basis. If this is the case then it means that an intellectual corruption has been made by Pakistani legislatures who know that with this law despite a 350 increase in the tax rate the collection would definitely be less than in the past.
This writer is personally not in favour of minimum tax in any form; however, there cannot be any discrimination between two kinds of taxpayers. In Pakistan all other taxpayers are subject to minimum tax on turnover and alternative corporate tax. Now a minimum tax which was there, and was and will be the only source of income has been omitted.
This means that our legislators are either not aware of what they have done or they are too clever by half to deceive the IMF by notionally increasing the maximum rate of income which is effectively non recoverable.
This writer will write more on agriculture income; however, whatever has been stated reveals that Pakistan is facing economic problems not for the reason that we do not have resources or the people. The reason is the high level of incompetence and intellectual corruption. Agriculture produces over 60 percent of materials which ultimately form part of the economic activity of the country. We repeatedly make efforts to make non-documentation easy in that sector. The best recourse is there:
a. Introduce a minimum adjustable withholding tax on the sale of cash agricultural crops with a low rate of say 1 to 2 percent;
b. Reduce the tax rate on income from 45 percent normal tax to 20 percent and then gradually bring equal to tax rate in other sectors;
c. Collection of agricultural income tax be assigned to FBR instead of the provincial department.
(Concluded)
Copyright Business Recorder, 2025
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