Agricultural Income Tax Becomes Law in Pakistan. Rates, Deadlines & Compliance

Starting January 1, 2025, agricultural income in Pakistan will come under taxation, with all provinces structuring their laws in harmony with federal tax regulations for individuals and businesses.

Each provincial government has adjusted its legislation to include both small-scale farmers and large commercial agricultural operations. While the timeline for enacting these laws varies by province, tax collection will commence in July 2025, retroactively covering income from the start of the year.

In Sindh, the Sindh Agricultural Income Tax Act 2025 was passed on February 3, 2025, and received gubernatorial approval on February 11. The law introduces a structured tax system with six income brackets, where earnings up to Rs 600,000 remain untaxed, but the highest earners—those making over Rs 5.6 million—will face a 45% tax rate alongside an additional super tax.

Punjab, through the Punjab Agricultural Income Tax (Amendment) Act 2025, passed on November 14, 2024, has revoked prior tax exemptions on agricultural revenue, extending tax coverage to livestock earnings. Non-compliance will result in penalties proportionate to income levels.

In Khyber Pakhtunkhwa (KP), the KP Agricultural Income Tax Act, enacted on January 27, 2025, introduces distinct tax brackets for small-scale farmers and larger agribusinesses, taking effect from January 2025.

Balochistan has also aligned with this taxation initiative through the Tax on Land and Agricultural Income (Amendment) Act, passed on February 3, 2025, and effective from January.

This comprehensive taxation framework seeks to expand provincial revenues through the agricultural sector while ensuring consistency with the national tax structure.