Provincial farm tax laws 'to be ready' by Jan

FinMin says foundation laid to correct economy's direction

ISLAMABAD:

Federal Finance Minister Muhammad Aurangzeb said on Tuesday that provinces would pass legislation for an agricultural income tax by January next year, with collection starting in July 2025, at the beginning of the next fiscal year.

Talking to Express News, the minister said that the foundation had been laid for accelerated economic growth, aiming to strengthen the country. He added that the government was forced to implement measures that had been neglected for the past seven decades.

Aurangzeb said that agricultural sector was being brought into the tax net in accordance with the conditions of the International Monetary Fund (IMF). Since agriculture was a provincial subject, the minister added, the provinces had agreed to enact necessary legislation in this regard.

"Agriculture is not a federal subject; it is a provincial subject. I am grateful to the chief ministers for agreeing to move forward with legislation related to the agricultural sector, ensuring that this sector can be included in the tax net," he said.

"Legislation regarding the agricultural income tax in the provinces will be enacted in January 2025," the finance minister said. "Collection of the income tax on agricultural incomes will begin on July 1, 2025," he added. He indicated that the threshold for exempted income would be set at Rs600,000, the same as in other sectors, to provide relief to small farmers.

"Efforts will be made to ensure small farmers are exempted from tax," he said.

Responding to a question, the minister stated that the tax-to-GDP ratio in Pakistan was very low, emphasising the need for increasing it. For that purpose, he underscored the importance of introducing comprehensive reforms.

When asked about the tax burden on salaried individuals, the minister said that additional revenues would be generated by expanding the tax net. He assured that as local resources increase, relief would be offered to the public, including the salaried class.

Aurangzeb mentioned that the measures implemented by the government had not been taken in the past 75 years. "A foundation has been laid to correct the direction of the country's economy, and the effects are already becoming apparent. Economic indicators are improving, and inflation is gradually decreasing," he added.

The minister is going to Washington to attend the annual meetings of the IMF and the World Bank. He also said that progress was being made on the National Finance Pact with the provinces.