Chairman of the Federal Board of Revenue (FBR), Malik Amjed Zubair Tiwana, Wednesday informed the Senate Standing Committee on Finance on the issues of inability of provinces to effectively tax the agricultural sector.
Today’s session highlighted significant disparities in the taxation of agricultural incomes, revealing a complex tax landscape in the country.
The FBR chairman revealed that a tiered taxation system is currently in place for the agricultural sector, with tax rates ranging from 5 percent to 15 percent applied to various income levels. However, he lamented that there is a glaring issue with the implementation of these tax rates.
Under the current system, agricultural incomes of up to Rs. 400,000 are entirely exempt from taxation, while a 1 percent tax rate is applied to incomes between Rs. 400,000-800,000. A 5 percent tax rate comes into effect for incomes above Rs. 1.2 million, the chairman added.
He further said that despite having nearly 5 million taxpayers in the country, there is a significant gap in Pakistan’s taxation system, with roughly 65 percent of the population unable to afford to pay taxes. This issue is exacerbated by the fact that an astonishing 15 million people in Pakistan are not contributing to the country’s tax revenue.
The FBR chairman remarked that if these 15 million individuals were to start paying taxes, it would have a significant impact on bridging the existing tax gap in Pakistan.
