For decades, agriculture was Pakistan's biggest tax loophole - roughly a quarter of the economy paying almost none of the taxes. That changed in 2025. Under commitments made in the IMF programme, every province rewrote its Agricultural Income Tax (AIT) law to match the federal rate card. If you own farmland, run an orchard or earn from livestock in Punjab or Sindh, you are now inside the net. This guide explains who is liable, the exemption limit, the slab rates, the per-acre land tax and the new super tax. For your salaried or business income, see our complete guide to income tax in Pakistan.
What is agricultural income tax?
Under the Constitution of Pakistan, the federal government cannot tax agricultural income - that power sits with the provinces. So while the FBR collects income tax on salaries and business profits, farm income is taxed separately by each province under its own law. In Punjab the governing statute is the Punjab Agricultural Income Tax Act 1997, heavily amended by the Punjab Agricultural Income Tax (Amendment) Act 2025. In Sindh it is the new Sindh Agricultural Income Tax Act 2025, which replaced the 2001 Ordinance with effect from 1 January 2025.
"Agricultural income" covers rent or revenue from land used for agriculture, income from cultivation, and - after the 2025 changes - income from livestock such as cattle, buffalo, sheep, goats and poultry kept for gain. The reforms deliberately mirror the FBR's non-salaried business slabs so that a farmer and a shopkeeper on the same income now face broadly the same rate.
Who is liable to pay?
Liability falls on any person - an individual, an association of persons (AOP) or a company - that earns agricultural income in the province above the exemption threshold. Key points:
- Net income up to PKR 600,000 per year is fully exempt, matching the federal threshold.
- Small landholdings of 12.5 acres or below are generally outside the land-based advance tax, protecting subsistence and small farmers.
- Companies earning agricultural income are taxed at corporate rates - 20% for a small company and 29% for other companies in Sindh.
- Owning land is not the only trigger - lessees and those earning livestock income can also be liable.
The old system taxed land by area at token rates of a few hundred rupees per acre. The 2025 reform shifts the real burden onto actual net income, so a large, profitable farm now pays far more than before, while genuinely small growers stay exempt.
AIT slab rates 2025 (Punjab & Sindh)
Both provinces adopted the federal non-salaried individual and AOP rates. These apply to net agricultural income (gross receipts less allowable expenses) for the tax year:
| Annual net agricultural income (PKR) | Tax rate |
|---|---|
| Up to 600,000 | 0% - exempt |
| 600,001 - 1,200,000 | 15% of the amount over 600,000 |
| 1,200,001 - 1,600,000 | 90,000 + 20% of the amount over 1,200,000 |
| 1,600,001 - 3,200,000 | 170,000 + 30% of the amount over 1,600,000 |
| 3,200,001 - 5,600,000 | 650,000 + 40% of the amount over 3,200,000 |
| Above 5,600,000 | 1,610,000 + 45% of the amount over 5,600,000 |
Because the system is progressive, only the slice of income inside each band is taxed at that band's rate - not your whole income. Here is the annual AIT payable at sample income levels:
Land-based advance tax (per acre)
Alongside the income slabs, Punjab charges a land-based advance tax by cultivated area on larger holdings. This is adjustable against - not additional to - your final income-based AIT liability, so it works as a minimum payment. Indicative Punjab rates after the recent budget changes:
| Land / area | Advance tax |
|---|---|
| Holdings up to 12.5 acres | Generally exempt |
| Cultivated land above 12.5 acres | Rs 1,000 per acre (flat) |
| Irrigated orchards | Rs 1,000 per acre |
| Non-irrigated orchards | Rs 500 per acre |
These per-acre figures are revised in provincial budgets and differ by district and crop, so treat them as indicative and confirm the current notified rate before you pay. If your income-based tax exceeds the land tax, you settle the difference; if not, the land tax stands as your minimum.
Super tax on large farm incomes
To capture the biggest agricultural earners, both provinces layer a progressive super tax on top of the slab tax, mirroring the federal super tax model. In Sindh, no super tax applies on annual income up to PKR 150 million; above that it rises in steps from 1% to a maximum of 10% on income exceeding PKR 500 million. Punjab applies a comparable surcharge on very high incomes. This is charged on total income, in addition to the 45% top slab, so a mega-farm or large corporate estate can face a combined burden well above the headline rate. Most farmers never reach these thresholds - the super tax is aimed squarely at the largest landowners.
Punjab vs Sindh at a glance
| Feature | Punjab | Sindh |
|---|---|---|
| Governing law | Punjab AIT Act 1997, amended 2025 | Sindh AIT Act 2025 |
| Effective from | 1 Jan 2025 (collection from Jul 2025) | 1 Jan 2025 |
| Exemption limit | PKR 600,000 | PKR 600,000 |
| Top slab rate | 45% over 5.6M | 45% over 5.6M |
| Super tax | Yes, on high incomes | 1% to 10% above 150M |
| Collecting authority | Board of Revenue | Sindh Revenue Board (SRB) |
| Livestock taxed | Yes | Yes |
How to register and file
The mechanics are still bedding in, but the shape is clear. Landowners and farm operators above the threshold must register with the provincial authority - the SRB in Sindh, the Board of Revenue in Punjab - declare net agricultural income for the tax year, and pay the tax due, with the land-based advance tax collected through the land revenue system. Late statements and late payment now carry stiffer penalties, including daily default surcharges, so keeping records of receipts and input costs matters. Because assessment of "net" income leaves room for interpretation, and because rates and forms are changing each budget, it is worth getting professional help the first year - our tax planning and advisory team can structure and file your return correctly.
Frequently asked questions
Is agricultural income taxed in Pakistan?
Yes - by the provinces, not the FBR. The Constitution bars the federal government from taxing farm income, so Punjab, Sindh, KP and Balochistan each levy their own Agricultural Income Tax.
What is the exemption limit?
Net agricultural income up to PKR 600,000 per year is exempt in both Punjab and Sindh, matching the federal non-salaried threshold.
What is the highest AIT rate?
45% on net income above PKR 5.6 million, plus a separate progressive super tax on very large incomes.
Who collects the tax in Sindh?
The Sindh Revenue Board (SRB) under the Sindh Agricultural Income Tax Act 2025. In Punjab it is the provincial Board of Revenue.
Do small farmers pay?
Farmers with net income below PKR 600,000, and holdings of 12.5 acres or below, are generally outside the tax. Larger, profitable farms are liable.
When did the new tax start?
The reformed regimes took effect from 1 January 2025. Punjab began collecting from July 2025 with retrospective effect from January.