Islamabad, Jan 25: In a move to diversify revenue sources, the Khyber Pakhtunkhwa provincial government introduced the Agricultural Income Tax Bill 2025 in the provincial assembly on Friday. The bill, presented by Law Minister Aftab Alam, aims to levy taxes on income derived from agricultural production in the province.
Tiered Tax System for Agricultural Income
The proposed bill outlines a tiered tax system based on annual agricultural earnings. The tax rates are as follows:
- 15% tax on incomes between Rs. 600,000 and Rs. 1.2 million
- 20% tax on incomes from Rs. 1.2 million to Rs. 1.6 million
- 30% tax for earnings between Rs. 1.6 million and Rs. 3.2 million
- 30% tax on incomes from Rs. 3.2 million to Rs. 5.6 million
- 40% tax for incomes surpassing Rs. 5.6 million
Additionally, a super tax will be imposed on landowners whose annual earnings exceed Rs. 150 million.
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Detailed Reporting Requirements
The bill also mandates landowners operating across multiple patwar circles to submit detailed location information along with their tax returns. Agricultural tax will apply to 50 acres of cultivated land or 100 acres of uncultivated land, reinforcing the provincial government’s focus on large-scale agricultural operations.
Corporate farming operations will be taxed at 20%, while larger farming entities will face a 29% tax. A daily penalty of 0.1% will be imposed on those who fail to pay their taxes without a valid justification.
Zonal Tax Collection System
To ensure effective tax collection, the Revenue Board will establish zonal tax collection systems, categorizing agricultural lands into three zones, with per-acre taxes ranging from Rs. 500 to Rs. 1,200 depending on the zone.
The introduction of this bill marks a significant step towards modernizing the provincial taxation system and generating additional revenue for Khyber Pakhtunkhwa. If passed, it will provide a structured approach to taxing agricultural incomes, aiming to enhance the province’s fiscal capacity.
