Friday, June 30, 2023

Sindh's Agricultural Income Tax Compared to Other Provinces in Pakistan

 

Sindh imposes taxes on land and income from agricultural land through the Sindh Land Tax and Agricultural Income Tax Ordinance, 2000 (Amendment) Act, 201

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 The tax on agriculture income in Sindh was Rs607 million in the financial year ended on June 30, 2021, compared to Rs619 million in the previous year
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All provinces in Pakistan have their respective laws to tax agricultural income. Punjab, for example, has the Punjab Agricultural Income Tax Act 1997, which taxes agriculture income based on acres or income computed under Clause 4 of the Act
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 The highest slab is 15% in case of Punjab and Sindh
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 Agriculture income is an exempt income from tax under section 41 of the Income Tax Ordinance, 2001, but it falls under the provincial domain as per the Constitution of Pakistan, and the provinces have the mandate to levy tax on agricultural incomes
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According to the FBR report on "Tax-Gap Analysis of Agricultural Income," the total provincial agricultural income tax collection in 2019-20 was Rs2.75 billion, out of which about 74% came from Punjab, 22% from Sindh, and merely 3% from Khyber-Pakhtunkhwa and Balochistan together
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 The collection from agriculture land taxation is low as compared to its potential, 0.5 percent of total provincial receipts in 2018-19, declining from 1.5% 
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In 2021, the Sindh government was contemplating increasing agriculture income tax (AIT) recovery by revising down the exemption limit to Rs600,000. The tax exemption on agriculture income of up to Rs1.2m should be halved
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In conclusion, Sindh's agricultural income tax is comparable to other provinces in Pakistan, with Punjab having the highest collection and Khyber-Pakhtunkhwa and Balochistan having the lowest. However, Sindh's government is considering revising down the exemption limit to increase tax collection.References:
  1. https://www.imf.org/external/pubs/ft/ppaa/ppaa9803.pdf
  2. https://pabalochistan.gov.pk/pab/pab/tables/alldocuments/actdocx/2021-04-20_07:48:58_96d20.pdf
  3. https://www.finance.gkp.pk/attachments/55103200b74b11e9a85fc9129ed7a8b2/download
  4. https://www.thebscon.com/agricultural-income-and-its-taxation-in-punjab/
  5. https://ebrary.ifpri.org/digital/api/collection/p15738coll2/id/133488/download
  6. https://pabalochistan.gov.pk/pab/pab/tables/alldocuments/actdocx/2019-10-03_12:28:55_c9d04.pdf
  7. https://pakistanlawyer.com/2023/02/10/the-khyber-pakhtunkhwa-land-tax-and-agriculture-income-tax-ordinance-2000/?amp=1
  8. https://tax.net.pk/2022/08/01/tax-on-agricultural-income-in-pakistan-2022/
  9. https://www.dawn.com/news/1613905
  10. https://tax.net.pk/2021/09/04/agriculture-income-tax-rate-in-punjab-pakistan-2020-2021/
  11. https://tribune.com.pk/story/2317792/taxing-the-agricultural-income
  12. https://tribune.com.pk/story/1237528/sbps-annual-report-sindh-ranks-worst-collection-income-tax-agriculture
  13. https://www.brecorder.com/news/40001312
  14. https://khilji.net.pk/agricultural-income-and-its-taxation-in-punjab/
  15. https://www.linkedin.com/pulse/unconstitutional-agricultural-income-taxation-dr-ikramul-haq
  16. https://www.jstor.org/stable/23734763

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