Government Targets Rs300 Billion Revenue from Agricultural Income Tax

The government of Pakistan is making significant strides towards enhancing its revenue collection, particularly through the agricultural sector. With a keen focus on collaboration with provincial authorities, the government aims to generate a substantial Rs300 billion from agricultural income tax. This initiative is part of a broader strategy to streamline tax collection processes and ensure that all sectors contribute fairly to the national exchequer.

To achieve this ambitious goal, the Federal Board of Revenue (FBR) has urged provincial governments to adopt the federal income tax schedule. This means that provinces will need to amend their existing Agricultural Income Tax (AIT) regimes to align with the federal tax structure. The proposed changes will encompass both personal income tax for small farmers and corporate income tax for larger agricultural enterprises. The new tax regime is expected to be implemented starting January 1, 2025, following the necessary legislative adjustments.

In addition to the agricultural income tax reforms, provincial governments are also set to transition their General Sales Tax (GST) system from a positive list to a negative list approach. This shift, planned for the 2025-26 fiscal year, aims to minimize tax evasion and ensure that all taxable services are accounted for. By targeting increased revenues from corporate taxes in the agricultural sector and enhancing GST collection, provinces are looking to bolster their overall tax collection efforts.

Moreover, the government is keen on developing a unified property taxation system, which will further streamline tax processes across provinces. Administrative reforms are also on the agenda, with a focus on reducing the tax compliance gap, especially in GST collection. The National Tax Council will expand its terms of reference to include the design of new tax measures, such as property tax, along with the necessary legal and administrative adjustments for their implementation.

This comprehensive approach not only aims to increase revenue but also seeks to create a more equitable tax system where all sectors, including agriculture, contribute their fair share. As these reforms take shape, it is crucial for stakeholders, including farmers and agricultural businesses, to stay informed and engaged in the process. The success of these initiatives will ultimately depend on the cooperation between federal and provincial authorities, as well as the willingness of the agricultural sector to adapt to the new tax landscape.