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Sindh Passes Agricultural Tax Law Amid Concerns Over IMF Exclusion and Impact on Farmers

“We don’t want the IMF programme to suffer because of us, but rushing this tax will create problems,” CM Murah Ali Shah

The Sindh Assembly on Monday passed the Agricultural Income Tax Bill 2025, a significant move aimed at enhancing tax revenue in line with commitments made under Pakistan’s $7 billion agreement with the International Monetary Fund (IMF).

The new law introduces a progressive tax structure that exempts agricultural income up to Rs 600,000 annually from taxation while imposing a maximum tax rate of 45% on incomes exceeding Rs 5.6 million annually.

Additionally, a super tax will be applied, with no charges for incomes up to Rs 150 million and a maximum of 10% for those exceeding Rs 500 million.

Sindh Law Minister Zia Lanjar while presenting the bill, stated that the tax formula had been structured under the existing regime, emphasising Pakistan had to fulfil several agreements under the IMF programme.

Sindh Chief Minister Murad Ali Shah expressed concerns during the assembly session about the rushed implementation of this tax, emphasizing that it could lead to complications for farmers, especially given the ongoing challenges such as drought conditions affecting agricultural productivity.

He highlighted that while the province does not want the IMF program to falter due to its actions, hastily imposed taxes could disrupt farming operations and food security.

The bill also shifts tax collection responsibilities from the Board of Revenue to the Sindh Revenue Board (SRB), aiming for a more efficient and streamlined process. It includes provisions for corporate farming, with small agricultural companies facing a 20% tax rate and larger firms subjected to a 29% rate. Notably, livestock is excluded from this tax framework.

Slamming the federal government’s move to transfer tax collection to the Federal Board of Revenue (FBR), the CM accused the federal government of deliberately keeping provinces out of the loop when it discussed a loan deal with the IMF.

“The FBR itself told the IMF that agriculture is not taxed,” Murad said, adding that the federal government initially assigned FBR to collect the tax last May but later forced provinces to implement the measure.

“The FBR has failed to meet its targets while burdening taxpayers further,” the CM said. Murad also highlighted Sindh’s stance on provincial autonomy, stating that the Sindh Revenue Board (SRB) had consistently met its targets and that sales tax should be handed over to provinces.

He noted that Punjab and Khyber Pakhtunkhwa had already passed the agricultural tax bill, while Balochistan’s cabinet had also approved it.

“We don’t want the IMF programme to suffer because of us, but rushing this tax will create problems,” he said, adding that the implementation timeline had already been pushed to January 2025 and later to September 30.

Pointing to drought-like conditions in parts of Sindh, he highlighted that the persistent shortage of irrigation water was affecting thousands of acres of farmland, including his own, which had become barren due to the construction of a dam.

“Hasty decisions on taxation can disrupt farming,” the CM said, emphasising the importance of agriculture for food security.

Saman Siddiqui

I am a freelance journalist with a Master’s Degree in Mass Communication and an MS in Peace and Conflict Studies. Since 2006, I have been involved in various capacities within the electronic media industry. At OyeYeah, I cover diverse genres ranging from journalism and fiction to fashion, including reviews and fact-finding reports.

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