IMF proposes Pakistan to impose 45% tax on agriculture income
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Web Desk
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11 Jul 2024
The International Monetary Fund (IMF) on Thursday proposed Pakistan to impose up to 45 percent tax on the agriculture sector, according to sources.
Sources claimed that three out of four provinces of Pakistan expressed consensus with global loan lenders after a separate virtual meeting with IMF’s representatives, also attended by officials in the federal ministry of finance.
During the meeting, the Sindh government said that the 35 percent to 45 percent income tax rate for the agriculture sector is too high compared to the existing 15 percent maximum rate.
Sources added the provinces assured the IMF of taking measures to meet its condition of tax and requested a two-day time for preparing a plan.
According to the sources, all four provinces will submit their plan to the IMF on July 12 (tomorrow).
Currently, the provinces have different income tax rates for the agriculture sector. In Sindh, up to Rs1.2 million in agriculture income was exempted from the tax net.
From Rs1.2 million to Rs2.4 million, farmers pay a 5% tax. For up to Rs4.8 million, the tax rate is 10%, and for over Rs4.8 million annual incomes, the rate is 15%.
Sindh’s farmers are also paying Rs200 per acre of irrigated land and Rs100 per acre of non-irrigated land advance income tax.
However, up to 16 acres of irrigated and 32 acres of non-irrigated land are exempted from the tax.
Khyber Pakhtunkhwa, where agriculture is not a source of income for the majority, up to one acre of land is exempted from income tax while KP’s maximum income tax rate is 17.5% or Rs15,000 per annum.
In Punjab, up to Rs1.2 million annual agriculture income, the rate is just Rs2,000 per annum.
From Rs1.2 million to Rs2.4 million, the income tax rate is 5%. From Rs2.4 million to Rs4.8 million, the rate is 10%, and for over Rs4.8 million income tax rate is 15%, annually.
As per the IMF's demand, each province would start collecting up to 45% of agriculture income tax by January 2025.
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