The Punjab government has proposed a higher agricultural tax and water cess under the Punjab Finance Bill 2026, along with several administrative and revenue reforms for the next fiscal year.
Under the proposed amendments to the Agriculture Income Tax Rules, no tax will be charged on agricultural land of up to 12.5 acres.
However, landholdings above 12.5 acres and up to 25 acres will now be taxed at Rs. 1,000 per acre, compared to the existing Rs. 300 per acre. The rate for land above 25 acres and up to 50 acres has also been increased from Rs. 400 to Rs. 1,000 per acre.
Similarly, land above 50 acres will be taxed at Rs. 1,000 per acre, up from the current Rs. 500.
For orchards, the tax on matured orchards has been raised from Rs. 600 to Rs. 1,000 per acre, while the tax on unirrigated orchards has been increased from Rs. 300 to Rs. 500 per acre.
The government has also proposed revising the water cess by replacing the crop-based system with a flat-rate structure. Under the new system, water cess will be charged at Rs. 1,650 per acre for the Kharif season and Rs. 850 per acre for the Rabi season.
The agriculture sector has also been given relief through the proposed abolition of the cotton fee charged on the arrival of raw cotton at ginning factories.
The government said cotton production has declined sharply in recent years, forcing many ginning units to shut down, particularly in South Punjab. The removal of the fee is aimed at supporting the struggling cotton industry and encouraging agricultural activity.
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