Sindh Takes U-Turn on 45 Percent Tax on Agricultural Income

The Sindh government has taken a U-turn on 45 percent tax on agricultural income, postponing the implementation of new tax rates for one year. The provincial government has restored the previous maximum rate of 15 percent, allowing farmers to continue paying taxes under the old structure for now.

According to officials, the new rates could not be implemented from January 1, 2025, as planned. As a result, the agricultural sector — which contributes nearly one-fourth to Pakistan’s economy — will continue to pay only a small amount of tax, while the salaried class paid Rs. 575 billion in income tax during the fiscal year 2024–25.

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Sindh Governor Kamran Tessori issued the “Sindh Agriculture Income Tax (Amendment) Ordinance 2025,” which suspends the IMF-agreed tax rates for one year. The move follows the Punjab government’s similar decision last month to delay new agricultural tax rates through an official notification.

Under the new ordinance, the same old rates under the 2000 law will remain effective from January 1 to June 30, 2025. Farmers earning up to Rs. 1.2 million annually will pay no tax, while income of Rs. 2.4 million will be taxed at 5 percent, Rs. 4.8 million at 10 percent, and above Rs. 4.8 million at 15 percent. Critics, however, argue that giving the government the power to change tax rates through notifications limits the authority of the provincial assembly.

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No official clarification has yet been issued regarding IMF and World Bank approval of this decision. Authorities said provincial governments are in contact with both institutions to address policy concerns. For now, the Sindh government has effectively taken a U-turn on 45 percent tax on agricultural income to ease the pressure on the farming community.