Khyber Pakhtunkhwa to Tax Agricultural Income

On Friday, the provincial government introduced a new bill in the Khyber Pakhtunkhwa Assembly aimed at taxing income derived from agricultural production. Law Minister Aftab Alam presented the Khyber Pakhtunkhwa Agricultural Income Tax Bill 2025.

Under the proposed tax plan, a tiered system would be applied based on annual agricultural earnings. A 15% tax would be levied on incomes between Rs. 600,000 and Rs. 1.2 million, 20% on incomes from Rs. 1.2 million to Rs. 1.6 million, and 30% for earnings between Rs. 1.6 million and Rs. 3.2 million.

For incomes ranging from Rs. 3.2 million to Rs. 5.6 million, the tax rate would remain at 30%, while those surpassing Rs. 5.6 million would face a 40% tax. Additionally, a super tax will be applied to landowners whose annual earnings exceed Rs. 150 million.

Landowners operating across several patwar circles will be required to submit detailed location information along with their tax returns. Furthermore, agricultural tax will be charged on 50 acres of cultivated land or 100 acres of uncultivated land.

Corporate farming operations involving small businesses will be taxed at 20%, while larger farming entities will face a 29% tax rate. Failure to pay taxes without proper justification will incur a daily penalty of 0.1%. The Revenue Board will establish zonal tax collection systems, categorizing agricultural lands into three zones, with per-acre taxes ranging from Rs. 500 to Rs. 1,200.