By Khalid Khan
The Khyber Pakhtunkhwa (KP) government has announced its intention to implement an agricultural income tax under the proposed Khyber Pakhtunkhwa Agricultural Income Tax Bill 2025. Once approved by the provincial assembly, the bill will impose a progressive tax structure on agricultural incomes, further straining a sector already grappling with neglect and financial challenges.
As per the draft legislation, individuals earning between PKR 600,000 and PKR 1.2 million annually from agriculture will face a 15 percent tax, while those with incomes between PKR 1.2 million and PKR 1.6 million will be taxed at 20 percent. For incomes between PKR 1.6 million and PKR 3.2 million, the rate will rise to 30 percent. Higher brackets include 40 percent tax on incomes between PKR 3.2 million and PKR 5.6 million and 45 percent on earnings exceeding PKR 5.6 million. A super tax will also be imposed on those earning over PKR 150 million annually.
The proposed law mandates individuals with land in multiple patwar circles to submit detailed location data and file annual returns for total agricultural income. Owners of more than 50 acres of cultivated or 100 acres of uncultivated land will also be subject to taxation. Additionally, heirs of deceased taxpayers will be responsible for clearing all outstanding liabilities.
While the bill ostensibly aims to increase provincial revenue, it overlooks the dire state of KP’s agricultural sector. Rising costs of seeds, fertilizers, and equipment, coupled with inadequate government support, have already rendered farming an unprofitable venture. The lack of a comprehensive agricultural policy has allowed fertile lands to be converted into housing societies, further diminishing agricultural output and farmer livelihoods.
The imposition of taxes without addressing systemic issues reflects a lack of vision and misplaced priorities by the PTI-led KP government. Despite claiming to champion economic reforms, the government has failed to invest in critical areas such as irrigation systems, crop research, and market infrastructure.
Farmers, already burdened by high input costs, now face the prospect of additional financial strain. The revenue generated from these taxes is unlikely to benefit the agricultural sector, given the government’s poor track record in utilizing public funds. Instead, the funds are expected to be consumed by corruption among political elites and civil bureaucracies, leaving the sector as neglected as ever.
Rather than focusing on taxation, the government should prioritize policy reforms to support farmers. Measures such as subsidies for seeds and fertilizers, affordable access to modern farming equipment, and protection of agricultural lands from commercial encroachment are urgently needed. Without these initiatives, KP’s agriculture sector will continue to decline, leaving farmers in a perpetual state of financial instability.
The proposed agricultural tax bill highlights the government’s inability to address the root causes of agricultural distress, further alienating a community that forms the backbone of KP’s rural economy.
