Pakistan’s agricultural tax higher than India, Bangladesh, Sri Lanka

The Institute of Cost and Management Accountants of Pakistan (ICMA) has raised concerns over the enforcement of the newly introduced agricultural income tax, citing outdated land records, fluctuating farm incomes, and weak tax collection mechanisms as major obstacles.

In its latest ICMA Economic Intelligence report, the institute noted that the tax, implemented under International Monetary Fund (IMF) conditions, ranges from 15% to 45%, with an additional 10% super tax on high-income landowners. This makes Pakistan’s agricultural tax rates among the highest in the region, exceeding those of India, Bangladesh, and Sri Lanka.

The report warns that the tax could burden small farmers and lead to higher agricultural product prices, fueling inflation. It also highlights political resistance as a key challenge in ensuring compliance.

To address these issues, ICMA has recommended a phased implementation, beginning with large landowners. It also urged the government to modernize land records, enhance digital tax tools, and introduce incentives to encourage compliance.