Sindh Approves Agricultural Income Tax Bill 2025 

The Sindh Cabinet approved the Agriculture Income Tax law during its meeting, proposing that agricultural income up to Rs. 600,000 annually will be exempt from tax, while the maximum tax rate for income exceeding Rs.  5.6 million annually will be 45 percent.  A progressive super tax has also been introduced, with no super tax on annual agricultural income up to Rs. 150 million and a maximum of 10 percent super tax applying to income exceeding Rs. 500 million annually.  The cabinet meeting was held under the chairmanship of Sindh Chief Minister Syed Murad Ali Shah here at CM House on Monday.  The meeting was attended by provincial ministers, advisors, special assistants, Chief Secretary, PSCM, Chairman P&D and other concerned officers.  New Agricultural Income Tax In line with the commitments outlined in the National Fiscal Pact between the provinces and the Federal Government, the Sindh Cabinet has approved the Sindh Agricultural Income Tax Law, setting the stage for its introduction in the Sindh Assembly.  This progressive legislation aims to strengthen the province’s tax collection framework and enhance fiscal responsibility within the agricultural sector.  Under this new law, the Sindh Revenue Board (SRB) will be the authority responsible for collecting and enforcing the agricultural income tax, ensuring a streamlined and efficient process. The proposed Sindh Agricultural Income Tax Bill 2025 is set to take effect on January 1, 2025.  The Bill states that agricultural income up to Rs. 600,000 annually will be exempt from tax, while the maximum tax rate for income exceeding Rs. 5.6 million annually will be 45 percent.  A progressive super tax has also been introduced there will be no super tax on annual agricultural income up to Rs. 150 million, while a maximum super tax of 10 percent will apply to income exceeding Rs. 500 million annually.  Additionally, the Bill aims to include corporate farming in the tax net. Small companies will be subject to a 20 percent tax rate on their annual agricultural income, while large companies will face a tax rate of 29 percent.  Notably, livestock has not been included in the tax net, and the advance agricultural income tax, based on land cultivation, will no longer be levied.  The payment, collection, and filing of agricultural income tax will be fully automated for greater efficiency.  This law represents a significant policy shift by assigning the administration of the Agricultural Income Tax (AIT) to the SRB, which has a proven track record in tax collection and implementing state-of-the-art business processes.  It is expected that this new legislation will broaden the tax base, improve transparency, and ensure equitable contributions from the agricultural sector, which is vital to Sindh’s economy.  Biannual report of National Finance Commission- NFC Award distribution, currently 7th NFC Award (year 2010) is under implementation.  The Federal Government transfers the share of provinces by the revenue distribution formula of components of the Divisible Pool, as prescribed in the Award.  The Divisible Pool Comprises Income Tax, Capital Value Tax, Sales Tax (Excluding GST on Services), Federal Excise (Excluding E.D on Natural Gas), Customs (Excluding Export Development Surcharge).  The CM said that the indicators of the divisible pool distribution include population having 82 percent weightage, poverty backwardness at 10.30 percent, Revenue collection/generation at 5 percent, and Inverse population density at 2.7 percent.  Punjab has a share of 51.74 percent in the divisible pool, followed by Sindh 24.55 percent Khyber Pakhtunkhwa 14.62 percent, Balochistan 9.09 percent.  The cabinet was told that the provincial government had received Rs 489.067 billion during 2021-22 (Jan to June 2022).  During the past three years 2021-22, 2022-23, and 2023-24 Sindh received a total of Rs. 3,002.43 billion against its share from the National Finance Commission (NFC). This amount was short by Rs. 77.16 billion. Recently, Sindh was compensated for these arrears of Rs. 77.16 billion.  Throughout this period, the Sindh government was given Rs. 1,325.35 billion against Straight Transfers, however, this was also short by Rs. 126.64 billion. The federal government has recently addressed this shortfall as well.  The cabinet accorded approval to the biannual NFC report (January to June 2022) for laying before the Provincial Assembly Sindh.  In a bid to modernize governance and enhance efficiency, the Sindh government has launched a comprehensive digitization drive for its Cabinet proceedings.  Following directives from Chief Minister Syed Murad Ali Shah, the Services, General Administration & Coordination Department (SGA&CD) has implemented a new Sindh Cabinet E-Portal, mirroring similar digitization efforts undertaken by the Federal Government in 2021.  The initiative aims to create a paperless and wireless environment, equipping each Cabinet member with an iPad and SIM-based internet connectivity. This replaces traditional LAN connections and marks a significant step towards a full E-Office and E-Governance framework.  The E-Portal will provide members with access to Cabinet working papers and regular summaries for the CM and facilitate the digital approval of meeting minutes and circulation agendas through the dedicated app and e-signatures.  The Cabinet members will also receive real-time pop-up notifications on their iPads, ensuring they stay updated on all developments and changes.