The agricultural income tax will be implemented from January 1, 2025, with all provinces enacting and notifying their laws in alignment with the federal personal and corporate tax regimes.
Each provincial government has amended its legislation to ensure the new tax applies to small farmers and commercial agriculture. Although each province has a different date for enacting its laws, the tax will be collected from July 2025, but with a retrospective effect from January 1, 2025.
The Sindh Provincial Assembly passed its law, the Sindh Agricultural Income Tax Act 2025, on February 3, 2025, with a Governor’s assent on February 11, 2025.
This act will introduce six tax slabs, including a 0% rate for incomes up to Rs 600,000, and higher rates for those with greater incomes. The highest rate, 45%, will apply to agricultural income exceeding Rs 5.6 million. A super tax will also be levied on high-income earners.
In Punjab, the Provincial Assembly passed the Punjab Agricultural Income Tax (Amendment) Act 2025 on November 14, 2024. This amendment eliminates exemptions on farm income and includes income from livestock, with fines for defaults based on income levels.
Similarly, Khyber Pakhtunkhwa (KP) passed the KP Agricultural Income Tax Act on January 27, 2025, introducing separate slabs for small farmers and corporate farms, effective from January 2025.
Balochistan’s Provincial Assembly also passed the Tax on Land and Agricultural Income (Amendment) Act on February 3, 2025, effective from January 2025.
This move aims to enhance the agricultural sector’s contribution to provincial revenues while ensuring alignment with federal tax policies.