Karachi (TDI): On Monday, the Sindh Assembly unequivocally approved the Sindh Agricultural Income Tax Bill 2025, which will impose a 45% tax on agricultural income beginning in January 2025.
This tax is mandated by the federal government in accordance with the conditions established by the International Monetary Fund (IMF).
The legislation was introduced in the assembly by Provincial Parliamentary Affairs Minister Ziaul Hassan Lanajar, following its approval by the provincial cabinet, which was chaired by Chief Minister Murad Ali Shah.
He referred to the Federal Board of Revenue (FBR) as a “hotbed of corruption” during his remarks on the measure.
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He denied the FBR’s assertion that the agricultural sector does not pay taxes, pointing out that the province has implemented agricultural taxes for more than three decades.
Shah also emphasized the FBR’s inability to effectively resolve tax collection, stating, “Just as the FBR failed in some areas, it failed here [in the agriculture sector] as well.” He noted that the Sindh Revenue Board (SRB) had consistently achieved its revenue objectives.
He emphasized that the provincial government rejected a federal proposal to have the FBR collect the agricultural income tax, stating that it was a provincial matter.
The chief minister recounted the incident. Shah explained that the provincial government initially expressed reservations about the swift implementation of the tax, which the IMF had insisted upon as part of the agreement.
According to him, the federal government had exerted pressure on the provinces to pass the bill, as evidenced by the fact that “K-P [Khyber Pakhtunkhwa] has passed the bill, Punjab has passed the bill, and Balochistan’s cabinet has approved it.” Their attention was then directed toward us, and they requested that we authorize it.
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Shah also expressed his dissatisfaction with the federal government’s treatment of the provinces, pointing out that provincial ministers and citizens were already paying taxes on a regular basis. “Me and my family pay our taxes, often more than those who find other ways to avoid them,” said the individual.
The chief minister underscored the significance of water in agriculture when addressing the obstacles encountered by farmers. He also mentioned that his family’s land was unable to be cultivated as a result of water scarcity.
He emphasized that taxes were essential for governance, but they should be implemented in a manner that benefits the economy without disproportionately burdening the populace.
Specifications of the Bill
The Sindh Agricultural Income Tax Bill 2025 is a component of the national fiscal agreements between the federal government and the provinces. Effective January 1, 2025, the SRB will be accountable for the collection and implementation of the agricultural income tax under the law.
The bill is designed to enhance transparency, broaden the tax base, and guarantee that the agricultural sector makes an equitable contribution to the province’s economy.
The tax will not apply to agricultural income up to Rs600,000 per year, while income exceeding Rs5.6 million per year will be subject to a maximum rate of 45%.
Furthermore, a super tax will be imposed on incomes exceeding Rs150 million, with a maximal rate of 10% for incomes exceeding Rs500 million.
The measure also incorporates corporate farming into the tax system, with small businesses subject to a 20% tax and large companies subject to a 29% tax.
It is important to note that the livestock sector is not subject to the tax, and the advance agricultural income tax, which was dependent on cultivated land, has been eliminated. In order to guarantee transparency, the entire tax payment, collection, and filing procedure will be automated.
