Retrospective application from Jan 1: Agri tax will be levied from July 1

ISLAMABAD: The agricultural income tax will be applicable retrospectively from January 1, 2025, as all the provinces have legislated and notified their respective laws.

It was agreed that each province amends their agricultural income tax legislation and regime to fully align it with the federal personal income tax regime for small farmers and the federal corporate income tax regime for commercial agriculture, so that taxation can commence from January 1, 2025.

According to the experts, the laws would be applicable retrospectively for collection of the agricultural income tax by all provinces with effect from January 1, 2025.

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All provinces have different dates for the enactment of their respective Agricultural Income Tax Acts, but the effective date for collection is the same with retrospective effect (January 1, 2025).

The four provincial governments of Punjab, Khyber Pakhtunkhwa, Sindh and Balochistan will begin agricultural income tax collection from 1st July 2025 with retrospective effect from January 1, 2025.

Under the Sindh Agricultural Income Tax Act 2025, the Provincial Assembly of Sindh passed the law on February 3, 2025 and assented by the Governor of Sindh on February 11, 2025.

Sindh Agricultural Income Tax Act 2025 would have effective date of January 1, 2025.

In case of Sindh, six slabs of Agricultural Income Tax have been provided in the Act with zero percent agricultural income tax where taxable income does not exceed Rs 600,000. Where total income exceeds Rs 600,000, but does not exceed Rs 1,200,000, the rate of agricultural income tax would be 15 percent of the amount exceeding Rs 600,000. Where total income exceeds Rs1,200,000, but does not exceed Rs1,600,000, the rate of agricultural income tax would be Rs 90,000 plus 20 percent of the amount exceeding Rs 1,200,000.

The highest slab revealed that where total income exceeds Rs 5,600,000, the rate of agricultural income tax would be Rs 1,610,000 plus 45 percent of the amount exceeding Rs 5,600,000.

A super tax would also be imposed on high income earners at specified rates and payable by the owner on agricultural income for respective agricultural income year commencing from January 1, 2025.

Provincial Assembly of Punjab passed the law on November 14, 2024 and assented by the Governor of Punjab on November 27, 2024.

Punjab Agricultural Income Tax (Amendment) Act 2025 would come into force on January 1, 2024.

The Act, amending the 1997 law, omitted exemptions given on farm income, while also taxing income from the livestock sector.

In case of default in tax payment, Rs10,000 fine will be imposed on income less than Rs1.2 million, Rs20,000 on income less than Rs40 million and Rs50,000 on income above R40 million.

A super tax shall be levied at the rates specified in the Income Tax Ordinance 2001 for high income earners from agricultural income in Punjab.

The Khyber Pakhtunkhwa (KP) Provincial Assembly passed the law on January 27, 2025 and assented by the Governor of KP on February 7, 2025.

KP Agricultural Income Tax Act 2005 would have effective date of January 1, 2025.

The said Act has specified separate slabs for the rate of tax on total agricultural income for small farmers and corporate farming.

Balochistan Tax on Land and Agricultural Income (Amendment) Act 2024 was passed by the provincial assembly of Balochistan on February 3, 2025.

The Balochistan Tax on Land and Agricultural Income (Amendment) Act 2024 would have come into force from January 1, 2025.

Copyright Business Recorder, 2025