Agricultural income tax rates by province (2025 reform)
Agricultural income tax rates in Pakistan went through their biggest change in decades during 2025 — and then partly reversed. If you are trying to find "the" rate, the honest answer is that there is no single national figure: agriculture is a provincial subject, each province sets its own slabs, and the 2025 reform that was meant to standardise them upward has been unevenly deferred. This guide explains what changed, what was rolled back, and why the current rate for your situation must be confirmed with your province.
Provincial, not federal
Under the Constitution, tax on agricultural income belongs to the provinces. FBR does not collect it — each province administers its own agricultural income tax law through its own machinery, historically the district collectors under the land revenue system, and in Sindh now the Sindh Revenue Board. The federal Income Tax Ordinance simply exempts agricultural income from federal tax, leaving the field to the provinces. The consequence is that rates, thresholds and even the collecting authority differ across Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan. The broader mechanics of that federal-provincial split are covered in agricultural income tax in Pakistan.
The 2025 reform
Under the IMF Extended Fund Facility, all four provinces committed to align their agricultural income tax with federal income tax rates from 1 January 2025, with collection from July 2025. In practice that meant:
- Progressive slabs starting at a 0% band and rising toward a top rate of 45% on the highest agricultural incomes.
- A super tax on high net-worth agricultural earners, mirroring the federal super tax.
- In Sindh, a structural overhaul: the 2025 Act moved administration to the Sindh Revenue Board, abolished the old area-based advance tax, and introduced self-assessment with returns generally due 30 September.
Each province enacted its own version on its own date through 2024–25, so the reform was never a single uniform switch.
What each province charges on, in outline
| Province | Basis historically used | Direction after the 2025 reform |
|---|---|---|
| Punjab | Land holding, with an income option | Toward taxing income at rates aligned with federal slabs |
| Sindh | Land holding, with an income option | Same direction |
| Khyber Pakhtunkhwa | Land holding and income | Same direction |
| Balochistan | Land holding | Same direction, later timetable |
The reform's shape matters more than any single rate: agricultural income moves from a land-area proxy toward being taxed like other income. Two consequences follow. Larger farming operations face materially higher provincial liabilities than the old per-acre basis produced, and the provincial return becomes the document that substantiates the federal exemption — because it now reports an income figure rather than an acreage. Confirm the current provincial rates and commencement dates before computing; several were announced, deferred and revised.
You draw a salary, tax is deducted at source every month, and you want the return filed properly without spending a weekend inside IRIS.
The deferrals and the reversal
Agricultural income across the two systems
| Question | Provincial agricultural income tax | Federal income tax |
|---|---|---|
| Who levies it | The province where the land sits | FBR |
| Is agricultural income taxed? | Yes, under provincial law | Exempt — but only if it is genuinely agricultural |
| What evidence is expected | Land record, produce records, provincial return | Proof that the exemption applies |
| Effect of not paying provincially | Provincial recovery | The federal exemption becomes harder to sustain |
| Appears in the wealth statement? | — | Yes, as income funding the increase in wealth |
Implementing a 45% rate mid-year proved difficult, and by late 2025 the two largest provinces had pulled back:
- Sindh deferred the higher federal-aligned rates by a year through an amendment ordinance and reinstated a lower progressive structure — broadly exempting income up to Rs 1.2 million, then charging 5% between Rs 1.2 and 2.4 million, 10% up to Rs 4.8 million, and 15% above Rs 4.8 million.
- Punjab also deferred enforcement of the higher rates, and the revised Punjab rates were subsequently ruled invalid by the provincial assembly on the ground that rate changes must be laid before it in the budget session rather than imposed by executive notification.
- For the following year the provinces diverged — Sindh aligning its super tax with the federal regime and dropping advance tax, while Punjab and KP moved in the opposite direction and increased advance tax instead.
Why paying it still matters federally
Even though FBR does not levy agricultural income tax, it cares whether you paid it. If provincial agricultural tax due on your farm income is not paid before you file your federal return, the corresponding income can be treated as unexplained under section 111 of the Income Tax Ordinance — turning exempt farm income into a federal problem. Agricultural income also has to reconcile in the wealth statement, so claiming large exempt farm income to explain assets requires that the provincial tax position is squared away and evidenced.
Getting it right
The practical steps: identify the province where the land lies and its current agricultural income tax law; confirm the applicable slab and collecting authority with that province, because the 2025 rates were widely deferred and in Punjab contested; pay the provincial tax before filing federally so the income is not caught by section 111; and keep land, produce and payment records. Anyone unsure whether they must also file federally should read who must file a tax return.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Provincial agricultural income tax (Punjab Revenue Authority)
- Sindh Agricultural Income Tax (Sindh Revenue Board)
- Income Tax Ordinance 2001, updated (FBR)
Questions people also ask
What are the agricultural income tax rates in Pakistan now?
They are in transition and differ by province. In 2025 every province amended its law to align with federal rates — progressive slabs rising toward a top rate of 45% plus a super tax on high earners. But Sindh and Punjab then deferred the highest rates, so the figure actually applied in a given province and year is not uniform. The only reliable answer for a specific case is the current slab published by that province's authority.
Did the 45% agricultural income tax actually take effect?
Not everywhere, and not fully. The 45% top rate was the federal-aligned target the provinces committed to under the IMF programme from January 2025, but both Sindh and Punjab deferred enforcement of the higher rates by a year, citing administrative difficulty and resistance from landowners. Sindh reinstated a lower structure by ordinance, and the revised Punjab rates were later challenged. So the headline 45% is the target, not necessarily what a farmer paid.
Which authority collects agricultural income tax in my province?
It varies. In Sindh, administration moved to the Sindh Revenue Board under the 2025 Act. In Punjab it has historically been collected through district collectors under the land revenue system. Khyber Pakhtunkhwa and Balochistan each administer their own regimes. Because both the rates and the collecting authority differ and have changed, confirm both with the relevant provincial body before filing or paying.
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