Islamabad: The two largest provinces of Pakistan — Punjab and Sindh — have reverted to the old tax rates for the imposition of Agriculture Income Tax (AIT), reversing the alignment that had earlier been made with the federal Personal Income Tax (PIT) rates.
The Punjab Board of Revenue was the first to restore the previous AIT rates for Tax Year 2025, following the powers granted under the Punjab Agricultural Income Tax (Amendment) Act 2024. The provincial assembly had authorised the notification of revised rates, under which the old AIT structure will apply for the ongoing tax year.
Sindh followed suit through the promulgation of an ordinance on October 28, 2025. The ordinance prescribes the application of old AIT rates for the period from January 1 to June 30, 2025, bringing the Sindh regime in line with Punjab’s. According to officials, the new, higher rates will take effect from July 1, 2025, onward.
“This ends the discrimination against Sindh farmers. The new AIT rates (i.e., the higher rates) will apply from July 1, 2025,” a senior official of the Sindh government said.
Under the restored structure, there will be no tax on total income up to PKR 1.2 million. Income between PKR 1.2 million and PKR 2.4 million will be taxed at 5 percent of the amount exceeding PKR 1.2 million. For income between PKR 2.4 million and PKR 4.8 million, the payable tax will be PKR 60,000 plus 10 percent of the amount exceeding PKR 2.4 million. Income above PKR 4.8 million will be subject to PKR 300,000 plus 15 percent of the amount exceeding PKR 4.8 million.
Previously, Sindh had notified significantly higher AIT rates, with the top rate reaching 45 percent, while small companies were taxed at 20 percent and other companies at 29 percent. A super tax of up to 10 percent was also imposed on higher-income earners in the agriculture sector.
Both provincial governments had initially raised AIT rates to comply with commitments made under the International Monetary Fund’s (IMF) USD 7 billion Extended Fund Facility (EFF). The IMF had recently reached a staff-level agreement for the completion of the second review under the programme, with the third tranche expected to be considered by the Executive Board in December 2025.
Officials said the reversal of AIT rates could pose challenges during upcoming IMF discussions. However, sources indicated that the IMF may have allowed a temporary relaxation for six months as a relief measure to offset the negative impact of recent floods that caused significant losses to the agriculture sector during the current fiscal year.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
